Arca Capital is threatening legal case against beleaguered Czech coal miner NWR and the companies that helped it list, the private equity fund announced in a statement on February 1.

The investor says it wants to draw attention to alleged irregularities during the IPO of the company, and is seeking an explanation for the extreme overvaluation of the stock at that time. NWR listed in London, Prague and Warsaw in 2008. The investor says it is seeking an explanation from the coal miner and its advisers on the float for what it calls "overstated" coal reserves.

Arca says it "has some indication that there was serious misconduct in the primary subscription of NWR shares on the stock market. To protect its investment Arca gather evidences and prepare documents for possible action and compensation for damages".

Arca Capital holds more than 2% in NWR, whose shares have become practically worthless following a restructuring last year. While majority owner, oligarch Zdenek Bakala, may have hoped the deal - in which shareholders put in extra capital and bondholders agree a haircut - would right the company, it already appears to have failed. NWR is now trying to renegotiate a deal with the government on the closure of the Paskov mine.

"Arca Capital is currently analyzing all the irregularities that occurred in connection with the initial public offering of NWR equity shares," the statement continues. One of the key arguments is that coal reserves were overstated, it says.

"Total reserves could be overstated by nearly 50% to 419mn tonnes. That pushed the estimated time of mining to 32 years instead of 17, the investor states. "Arca therefore demands an explanation from Morgan Stanley & Co, who helped to arrange IPO, and American John T. Boyd Company, which helped to value the condition of the coal reserves."

"In the event that the evidence is leading to the conclusion that there has been a violation of laws or other regulations, Arca is planning to contact the responsible person and lodge complaints with the request for investigation by the competent authorities," the statement concludes.