A U.K. court ordered creditors of New World Resources Plc (NWR) to vote on an 825 million-euro ($1.1 billion) debt restructuring plan that will help the Czech coal producer avoid bankruptcy.
Holders of the company’s senior secured bonds and senior unsecured notes will vote separately at the end of August under a U.K. legal procedure known as a scheme of arrangement, a London judge ruled today. It requires NWR to get the backing of at least 75 percent of each class of creditors.
Czech billionaire Zdenek Bakala, the majority owner of NWR, is seeking approval to cut debt by 45 percent and increase the number of shares 25 fold. After six quarters of losses fueled by plunging coal prices and government pressure to keep a money-losing mine open, the only other option would entail selling most of the company’s assets, which could leave some investors with nothing, it said on July 2.
NWR’s restructuring plan includes raising 150 million euros from a share sale, with the new equity representing 96 percent of the total and current shares outstanding making up the remaining 4 percent, the company said in a July 2 statement. In addition to losses on unsecured debt, owners of secured bonds will book a 25 percent reduction in the value of their holdings, it said.
The plan had the support of 84 percent of senior secured noteholders and 65 percent of senior unsecured bondholders, NWR said in a statement on July 15.
The miner’s 275 million euros of senior unsecured bonds maturing January 2021 are trading at 15 cents on the euro, lifting the yield to a record 63 percent. Its 500 million euros of secured debt due May 2018 rose five cents this month to 72 cents, according to data compiled by Bloomberg.
NWR didn’t pay the coupon on its unsecured notes that was due this month, triggering a 30-day grace period, according to the July 15 statement.
The company narrowed its losses to 27 million euros in the first quarter after cutting operational costs to compensate for falling commodity prices. It posted a record loss of 465 million euros in the final three months of last year after writing down the value of its assets.
To contact the reporter on this story: Julie Miecamp in London at email@example.com