Tauron Polska Energia SA, Poland’s second-biggest power utility, agreed to buy mining assets from state-owned Kompania Weglowa SA as the European Union’s biggest coal producer seeks cash amid slumping prices of the fuel.
Tauron, also controlled by the government, will pay 310 million zloty ($102 million) to buy out Kompania’s 48 percent stake in Poludniowy Koncern Weglowy SA and take full ownership of the company, it said in a regulatory statement today. Tauron shares slid as much as 5 percent to a three-month low after the announcement and traded down 1.3 percent lower at 4.74 zloty as of 1:36 p.m. in Warsaw.
Kompania, which produces about half of Poland’s coal, last month started talks with another state-controlled coal producer Jastrzebska Spolka Weglowa SA to sell its Knurow-Szczyglowice mine and started talks with unions to cut jobs. Without the plan to lower costs, Kompania “won’t survive,” acting Chief Executive Office Marek Uszko told reporters on Nov. 19.
“Both Tauron’s and JSW’s transactions have to be looked at in the context of saving Kompania,” Leszek Iwaszko, an analyst at Societe Generale SA, said by phone from Warsaw today. “However, the purchase is in line with Tauron’s strategy and the price doesn’t seem too high.”
Tauron, which will transfer 232.5 million zloty to Kompania today as part of its payment for the stake, said in an e-mailed statement today that Poludniowy Koncern is profitable and “invests to boost production capacity.”
Kompania had a 295 million-zloty loss in the first nine months as coal prices for next year’s delivery declined to a four-year low of $80.75 a ton earlier this quarter, or below Kompania’s production cost.
The company, which plans to cut its workforce to 38,600 in 2020 from the present 56,500, may raise more than 1 billion zloty from the sale of its Knurow mine, PAP newswire reported on Nov. 22, citing unidentified representatives of Kompania.
JSW may complete the purchase of Knurow by the end of the first half of next year, Chief Executive Officer Jaroslaw Zagorowski said last month.
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