NWR Posts Longest Rally in 5 Months on Asset Plan: Prague Mover

New World Resources Plc, an unprofitable Czech supplier of steelmaking coal, rose for a fourth day, extending its longest rally in almost five months, after the company said it will sell assets to pay for debt.

The stock added 1.6 percent to 22 koruna at the close in Prague, bringing a four-day increase to 24 percent, the longest stretch of gains since February. NWR was the second biggest advancer in percentage terms on the benchmark PX index, which fell 1.6 percent. The Czech miner invited bids for its OKK coking-coal subsidiary, the Paskov mine and other assets, it said today.

NWR first signaled the possibility of asset sales in May, after posting a first-quarter loss. The company has 578 million euros ($749 million) of debt due in 2018, according to data compiled by Bloomberg. Jastrzebska Spolka Weglowa SA is among the “many” European companies invited by NWR to analyze assets put up for sale, PAP newswire reported July 1, citing the mining company’s chief executive officer, Jaroslaw Zagorowski.

“JSW is a logical buyer,” Petr Bartek, a Prague-based analyst at Erste Group Bank AG, said in a phone interview today. “The coking unit is an interesting asset, while the Paskov mine is old and probably losing a lot of money. I can imagine someone buying the two assets together as most of Paskov’s coal is processed by OKK.”

Moody’s Investors Service lowered NWR’s debt rating to B2, or five levels below investment grade, with a negative outlook on May 29. NWR’s operating performance has worsened in recent quarters as a result of a prolonged deterioration of the coal market, Moody’s said.

“The first-quarter results reveal elevated cash burn,” Roger Bell, a JPMorgan Chase & Co. analyst in London, wrote in a report to clients in May. “We anticipate the business should be able to manage until 2018, at which point an about 500 million-euro bond maturity presents very challenging refinancing risk.”

NWR’s shares tumbled 74 percent in the three months ended June 30, the steepest quarterly slump since at least September 2008, as a recession in the Czech Republic and the euro area damped demand. The drop compares with a decline of 8.8 percent for the PX Index.

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