The Czech government is seeking to negotiate the future of troubled mining company New World Resources directly with its owners rather than managers who don’t have a “clear mandate” for the talks, Industry and Trade Minister Jan Mladek said.
Government representatives, scheduled to meet NWR Chairman Gareth Penny and the mining subsidiary’s Chief Executive Officer Dale Ekmark on Jan. 14, need more clarity on the company’s ownership structure before they can discuss potential financial aid for miners likely to lose their jobs, Mladek told reporters in Prague on Tuesday.
“There’s a clear structure of the current owners, but the problem is that they apparently pledged their share to the bondholders who can become owners in the future,” he said. “We’re not sure when it will happen and we need to discuss their commitment with them.”
The last Czech producer of coking coal, which went through a forced debt restructuring in 2014, could become insolvent by the middle of this year, Finance Minister Andrej Babis said in December. The government is trying to negotiate a “soft landing” for the company’s mines, which employ about 13,000 people in the eastern Ostrava region that has the second-highest unemployment rate in the country.
“There’s no future” for NWR’s unprofitable Paskov pit, which will “most likely” close down before the end of this year, Mladek said. The remaining mines will gradually shut down by 2022 at the latest, according to the minister.
NWR shares gained 11 percent to 0.10 koruna at 2:23 p.m. in Prague. The stocked peaked shortly after its May 2008 initial public offering and has since plunged more than 99 percent.
The government has been reluctant to provide aid for NWR, arguing that the company’s billionaire founder and main shareholder Zdenek Bakala should provide the cash. If bondholders convert their debt and become majority shareholders, the government may be more open to pledge aid, Mladek said.