Czech mine holding NWR suspends trading and forecasts wind up

Czech mine holding NWR suspends trading and forecasts wind up
NWR has been playing chicken with the Czech government for weeks.
By bne IntelliNews May 4, 2016

Czech-based coalmining holding New World Resources (NWR) announced on May 4 that it is suspending trading in its shares and will likely be wound up as a result of the insolvency filing a day earlier of key unit OKD. The company says shareholders are unlikely to see any return on their investment.

The announcement is a further step in the tussle between NWR's owner Ad Hoc Group (AHG) and the Czech government. The pair has been engaged in a game of chicken for weeks, as AHG has pushed for an agreement on state aid, warning of an “uncontrolled bankruptcy” that could knock up to 0.4 percentage points from Czech GDP and cost the state €1.2bn.

Prague has said it will not respond to "blackmail" or bail out the shareholders. However, it maintains it will help smooth the process of closing down the mines, which employ around 13,000 in the depressed industrial east of the country.

Shares in NWR have already been suspended from trading in London, the company said in a statement. The Prague and Warsaw bourses are now processing requests to follow suit.

“As OKD is the only trading subsidiary of the NWR Group, the likely impact of the insolvency of OKD is that the remainder of the NWR Group will be wound up or broken up in an orderly manner,” NWR noted.

“If this occurs, it is expected that there will be very minimal or no returns to the shareholders of NWR Plc, apart from the potential distribution of any cash balances of NWR Plc that may remain after the orderly wind up or break up of the NWR Group,” the statement continues.

Several of NWR's mines are not viable because of low coal prices, pushing the group into operating losses and leaving it struggling to service heavy debts racked up by Zdenek Bakala. The controversial financier handed his shares over to AHG - which features a trio of bondholders and creditors that hold 60% of the company - in February.

AHG has discussing a restructuring of liabilities and the provision of vital additional liquidity in the weeks since with NWR and the Czech government. The bondholders recently suggested the government could buy NWR debt free for under €150mn.

OKD filed for insolvency on May 3, but stressed that it aims to restructure and maintain operations. The miner said in the petition submitted at the regional court in Ostrava that it has debts of at least CZK17bn (€629mn) to around 650 creditors but assets of less than CZK7bn.