Czech Industry Minister Tells NWR Needs Survival Plan
The Czech industry minister urged loss-making coal miner New World Resources (NWR) on Thursday to come up with a new plan, after the government rejected the company's request for state aid to help it survive a coal price slump.
The industry and trade ministry postponed talks with NRW on Wednesday after receiving the company's request for aid and other proposals, but has said it is ready to take action to save jobs.
"From the point of view of the government the highest priority is of course to help the miners, the people in the area, the people in the region," Industry and Trade Minister Jan Mladek said on Thursday.
"The situation is serious ... The problem is they have submitted an undignified proposal, and that is still a polite adjective."
NWR has not revealed the size of its request for aid.
The head of the Czech Chamber of Unions, Josef Stredula, told Reuters that NWR had estimated its needs at around 150 million euros ($164 mln) but said it was up to the firm to confirm the numbers. NWR had no comment. Unions said the company has also sought a 5 percent cut in wages as part of a rescue deal, but said they oppose any such cuts.
NWR, which operates four coking and thermal coal mines along the northeastern border with Poland, has said it could run out of cash by the third quarter of 2016.
It has said it may sell assets or could wind down activities if it faces cash shortages and does not find alternative solutions.
A government document seen by Reuters said NWR had charted a variety of options from a quick or gradual shutdown, a split into loss-making and viable companies, merging with steel or electricity firms or partial asset sales.
NWR has 13,000 employees and further jobs would be at risk in related industries in the north-eastern Czech region where NWR is based.
Relations between the government and NWR have long been icy. The firm was valued at 3.5 billion pounds when floated in 2008. It paid dividends and raised debt, before a coal price drop forced a financial restructuring in 2014. The firm's market capitalisation has slumped, valued now at 23 million pounds.
Major players in any restructuring will be holders of the firms' 2020 senior notes and 2020 convertible bonds.
The firm had agreed in 2013 to keep one loss-making pit going until 2017 in return for 600 million crowns in state aid. But the deal has fallen through because coal prices have dropped below thresholds agreed in the deal.
The firm had 57 million euros in cash at the end of the third quarter.
(Reporting by Jan Lopatka and Jason Hovet)
