New World Resources Fights Record Loss With OKK Sale, Cost Cuts
New World Resources Plc (NWR) expects to sell its OKK coking plant this year to help counter a slump in coal prices that triggered a record loss at the Czech mining company, Chief Financial Officer Marek Jelinek said.
“We are currently negotiating a share-purchase agreement with several potential buyers” of OKK, Jelinek said today in a phone interview. “We have a good chance of closing the sale and receiving the cash before the end of this year.”
NWR shares and bonds rallied on speculation the divestment will help shore up the Amsterdam-registered company’s finances after it began posting losses last year because of falling demand for coal from steelmakers and energy utilities. NWR will further cut jobs, curb mining costs and investment and focus more on producing the more profitable coking coal rather than thermal coal, it said.
NWR shares jumped as much as 13 percent, trading up 8.3 percent to 24.05 koruna by 10:55 a.m. in Prague with traded volume at 168 percent of the three-month daily average. Yields on its unsecured euro-denominated notes due in January 2021 tumbled 220 basis points, or 2.20 percentage point, to a two-month low of 26.95 percent, data compiled by Bloomberg shows.
The net loss for the April-June period widened to a record 315.4 million euros ($421 million) from 80.3 million euros in the first quarter as the company took a 307 million-euro non-cash impairment charge on its assets, according to the statement. That compares with the average estimate for a 65.3 million-euro loss in a Bloomberg survey of 13 analysts.
“When adjusted for the impairment, the results are better than expected,” Bohumil Trampota, an analyst at J&T Banka AS in Prague, wrote in e-mailed comments. “Negotiations on the OKK sale and its expected completion by the end of 2013 could support the company’s liquidity, along with the cost savings.”
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