Ashmore to M&G Take Charge of NWR Rescue Bid as Owner Exitsby
NWR CEO sees `new lease on life' as founder Bakala pulls out
Czech coal company facing `tough decisions' on Paskov mine
Creditors of New World Resources Plc, including Ashmore Investment Management Ltd., are assuming control of the unprofitable Czech coal mining company and taking charge of efforts to rescue it.
More than 60 percent of NWR will be owned by its bondholders after CERCL Mining Holdings BV returns all its shares for free, NWR Chief Executive Officer Gareth Penny said in an interview on Wednesday. The exit of CERCL, a 50.4 percent shareholder co-owned by NWR’s founder Zdenek Bakala, and waivers granted by creditors will be followed by restructuring talks with other investors, the government and labor unions, according to the chief executive.
“The bondholders and the shareholders, who are now one, have clearly given this company a new lease on life,” Penny said. “We are optimistic that we will find that agreement, because we think it’s in everybody’s interest.”
NWR is racing against time to avert bankruptcy less than two years after it restructured its debt and received a cash injection from investors including Bakala, as most operations remain unprofitable because of low coal prices. Penny said the company has to make “tough decisions” within a month or two about its Paskov mine, the money-losing asset within the OKD unit that has been at the center of talks with the government over the future of thousands of jobs.
“Clearly, there are parts of mines and whole mines within OKD that make money even at these prices,” Penny said. “So we know that we can fashion out a business that can actually survive and continue to provide employment and jobs for people for many many years into the future. We are not asking for a handout from the government.”
NWR also said on Wednesday its loss widened to 223 million euros ($245 million) last year from 21 million euros in 2014 as it booked a 199 million-euro impairment on its assets. Revenue shrank 7 percent to 630 million euros.
A group of three NWR bondholders, consisting of Ashmore, Gramercy Funds Management LLC and M&G Investment Management Ltd., said later on Wednesday it wants to use its status as the majority owner to fix OKD’s “complex but solvable problems.” Cooperation with the government, suppliers, customers and employees is needed to achieve an “operational turnaround” at OKD, according to an e-mailed statement from the group.
The shares were unchanged at 0.08 koruna on Wednesday, down 20 percent this year and valuing the company with a net debt of 298 million euros at 342 million koruna ($14 million). The price peaked at 620 koruna in June 2008, weeks after an initial public offering.
“The majority owner’s departure may attract speculators, but in the long term we can’t see any value in NWR shares,” said Josef Nemy, an equity analyst at Komercni Banka AS in Prague.