July 15 (Bloomberg) -- New World Resources Plc, the Czech coal producer that’s trying to avoid bankruptcy, surged the most in almost five months after it said 84 percent of holders of its senior secured notes accepted a debt-restructuring plan.
The company didn’t get the required 75 percent majority from holders of its senior unsecured notes, with only 65 percent agreeing to enter the lockup agreement, NWR said in a regulatory statement today. It also failed to get the majority vote required to make a coupon payment on its 275 million euros ($375 million) of senior unsecured notes due today, triggering a 30-day grace period, according to the statement.
Czech billionaire Zdenek Bakala, the majority owner of NWR, is trying to win support for an overhaul that would cut the company’s debt by 45 percent and increase the number of shares 25 times. After six quarters of losses spurred by plunging coal prices, the only other option is selling almost all of NWR’s assets, which could leave some investors with nothing, the miner said on July 2.
“NWR hasn’t received bondholders’ consent yet,” Bohumil Trampota, an analyst at J&T Banka AS in Prague, said in a note today. “From the short-term perspective, it seems that restructuring continues and the news could mean short-term support for the stock.”
The shares gained as much as 21 percent, the most since Feb. 25, and ended the day up 10 percent to 4.75 koruna in Prague, following a 19 percent surge in the previous two trading days.
NWR’s restructuring plan calls for raising 150 million euros from a share sale, with the new equity representing 96 percent of the total after the transaction and current shares outstanding equating to 4 percent, according to the company’s July 2 statement. In addition to losses on unsecured debt, owners of secured bonds due May 2018 will book a 25 percent reduction in the value of their holdings, it said.
NWR is pushing for a successful restructuring in the coming days before making a decision on the coupon payment due today, it said. Without the approval, the miner will sell its units, OKD AS in the Czech Republic and NWR Karbonia SA in Poland, leaving some investors with “minimal or no recoveries,” it said earlier this month.
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