JSW unions agree to suspend 14th monthly wage

By bne IntelliNews September 17, 2015

bne IntelliNews -


Struggling Polish miner JSW has agreed a deal with unions to suspend some benefits, which will result in PLN2bn (€480mn) of savings for the company in 2016-2018, JSW said in a statement on September 16. 

The deal improves JSW’s financial standing at a time when one of the miner’s bondholders, ING BSK bank, has demanded early redemption of €18mn of JSW bonds, with other bondholders also having an option to do the same.

JSW has been talking to unions about a restructuring plan that bondholders would accept, as the miner struggles because of the low price of coal on the market, with cash in the company reportedly dwindling. JSW held PLN545mn in cash and cash equivalents as at the end of Q2, including PLN106mn with limited accessibility, down from PLN721mn at the end of last year and PLN568.5mn at the end of Q1, PAP reported in early September.

In signing up to the deal, unions agreed for a three-year suspension of payments of the so-called 14th monthly wage, as well as of the coal equivalent (a cash equivalent of a traditional payment in kind). Also, administrative staff will not be paid an annual bonus tied to a miners' holiday in December.

“It’s a milestone for a restructuring plan of the company that could be accepted by all the bondholders,” said Pawel Borys, the head of strategy at PKO Bank Polski SA, one of the creditors, as quoted by Bloomberg.

In reaction to the deal, JSW stock, which has been trading around this year’s lows surged over 27% at close of September 16 on the Warsaw Stock Exchange to PLN14.2 per share. Still, the market environment for JSW, and other Polish state controlled mining companies, is expected to remain weak as recovery on the coal market is not expected to come soon.

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