UPDATE 1-NWR shares bounce on prospects for cash boost from sales

Tue Jul 2, 2013 10:42am EDT

* Shares jump 20 percent on news JSW looking at NWR assets

* JSW considering offer for some mining, coking assets

* Sales would help NWR survive downturn-analysts (Adds NWR comment, analysts, outlook)

By Jason Hovet and Jan Korselt

PRAGUE, July 2 (Reuters) - Shares in loss-making Czech coal miner New World Resources (NWR) jumped from record lows on Tuesday on prospects for a cash boost from asset sales that might help it ride out falling prices and a slump in demand from steelmakers.

NWR, owner of the Czech Republic's only hard coal mines, is racing to find 100 million euros in savings by cutting costs, investment and jobs. It is also looking to sell some mines to raise money after two straight quarters of record losses.

The company's shares rose by as much as 20 percent on the day after Polish coal miner JSW said it was looking at an offer to buy some of NWR's mining and coking assets, although it had no "ready-made" stance on it.

JSW's Chief Executive Jaroslaw Zagorowski told Reuters late on Monday that coking coal mine Paskov and NWR's flagship development, Debiensko in Poland, were part of the offer. Other European firms also received offers, he said.

NWR, also hit by cheap coal from the United States where miners are battling for market share with low-cost shale gas suppliers, said in May it had launched the sale of coking business OKK and was looking at idling or selling some mines.

Ceska Sporitelna analyst Petr Bartek said the sale of OKK or Debiensko would give NWR some time to wait out the market slump.

NWR, which counts ArcelorMittal and U.S. Steel as customers, could get more than 80 million euros ($104.28 million) for OKK, he said.

That money could help cover a 78 million-euro Export Credit Agency (ECA) covered loan, Bartek said, if NWR breaches covenants, including exceeding net debt to EBITDA of 5 times, when a covenant holiday is lifted after the third quarter.

"If NWR sells one of the two good assets -- the coke business or Debiensko -- then it should have a relatively high probability of surviving the downturn," Bartek said.

NWR posted a first-quarter net loss of 80.3 million euros and said it had net debt of 643 million euros ($838.18 million). NWR's market capitalisation was 5.8 billion crowns ($290.52 million) at Tuesday's prices.

Shares in NWR, whose 2008 stock listing in London and Prague valued the company at 3.5 billion pounds ($5.33 billion), were up 14.7 percent at 20.90 crowns by 1332 GMT but languish 77 percent below year-beginning levels versus a 25 percent fall in the FTSE 350 mining index.

The yield on NWR's notes due in 2021 has shot up to 38 percent from just below 10 percent seen in April.

BH Securities senior analyst Petr Hlinomaz said NWR's share price slump was overdone. "In this moment and this year the situation (for NWR) is not that bad even when one reads about all the debt...the maturities of the debt are longer than what would cause the company to go bust," he said.

Analysts say rival JSW is NWR's best bet as a buyer of the Paskov and Debiensko mines in the current market.

NWR declined again on Tuesday to comment on the proposed sales. ($1 = 0.6568 British pounds) ($1 = 0.7671 euros) ($1 = 19.9643 Czech crowns) (Editing by David Cowell)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.