The Czech government may buy idle Frenstat mine from New World Resources Plc for 1 koruna (4 cents) as part of the unprofitable coal producer’s reorganization, Industry and Trade Minister Jan Mladek said.
NWR, which said two months ago that it risks running out of cash, will hold more talks with the government on the potential transaction and other changes at the Czech mining unit, OKD AS, Mladek told reporters on Thursday. Mladek, Finance Minister Andrej Babis and Labor Minister Michaela Marksova met with NWR managers and bondholders in Prague.
“We talked today with OKD managers and creditors, who play an important role,” Mladek said after the talks. “The agreement is that we’ll negotiate separately about two issues: a reorganization of OKD, on which we’re able to reach some agreement, and the sale of the Frenstat mine for 1 koruna.”
Most of NWR’s operations have become unprofitable because a global glut has pushed coal prices to the lowest level in at least eight years. The company is working with investment bank Moelis & Co. on a second debt restructuring in less than two years, according to two people familiar with the situation who asked not to be identified because the matter is private.
While job losses at OKD, one of the largest employers in eastern Czech Republic, are “inevitable,” the government wants dismissals to be spread over the longest possible period of time, Labor Minister Marksova said after the meeting.