New World Resources Plc, the largest Czech producer of coal for steelmakers, agreed to sell its OKK coking plant as part of a plan to scale down operations and stem record losses.
The plant will be sold to Metalimex AS for 95 million euros ($128.5 million), Amsterdam-registered NWR said today in a regulatory statement. NWR, which operates four active mines as well as the coking plant, said in May it will seek a buyer for OKK. Last week it also announced a planned shutdown of its unprofitable Paskov mine at the end of next year. The company published a record net loss of 315.4 million euros in the second quarter.
Prices of coking coal began to plummet last year as clients such as ArcelorMittal limited production because of smaller demand for steel from carmakers and other industrial companies. Before the plunge in demand, NWR invested in machinery for its Czech mines and prepared the Debiensko mine in Poland, a project which it mothballed this year.
“The Directors of NWR believe that the disposal of OKK is an important step towards becoming a more efficient, leaner and more flexible mining business,” Chief Executive Officer Gareth Penny said in the statement.
Moody’s Investors Service on July 24 cut the company’s rating to Caa1, nine steps below investment grade, from B2, citing declining coal prices and the prospect of “challenging market conditions” during the next 12 to 18 months.
NWR’s debt will probably equal 10 times earnings before interest, taxes, depreciation and amortization by year end, up from 3.8 times Ebitda at the end of 2012, Moody’s said.