UPDATE 2-Miner NWR averts insolvency as bondholders back rescue plan

Fri Aug 29, 2014 12:16pm EDT

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By Jan Lopatka and Silvia Antonioli

PRAGUE/LONDON, Aug 29 (Reuters) - New World Resources has won the support of bondholders for a rescue plan that will see some of them take big losses to allow the Czech coal miner to escape insolvency and try to fight back from deep losses.

The plan involves a large write-off for holders of unsecured bonds, as well as a big issue of new stock that will dilute shareholders. It must still be approved by courts before it can go ahead in the coming weeks.

NWR, hit by a drop in coal prices, has said the deal will reduce its debt by 325 million euros ($427 million) to 500 million.

NWR shares jumped as much as 18.6 percent to 3.50 crowns in Prague after the vote by bondholders. They closed up 5 percent at 3.10 crowns.

"The company has received an overwhelming degree of support for the transaction: 99.4 percent in value of the holders of secured notes and 95.3 percent in value of the unsecured noteholders present and voting at the meetings," NWR said in a regulatory filing on Friday.

Shareholders have already signed off on the deal.

NWR's stock has lost more than 99 percent of its value from its 2008 listing price of 425.8 crowns. Its unsecured bonds were bid in a wide range of 3 to 15 percent of face value before the vote, indicating high risk for the rate of recovery on the investment.

The firm, majority-owned by a group of investors including Czech billionaire Zdenek Bakala, is a major employer in the north-eastern Czech Republic with around 15,000 workers.

It supplies coal for heavy industry including ArcelorMittal and VoestAlpine and thermal coal for electricity maker CEZ.

Analysts said that even after the restructuring, the firm's longer-term future hinged on a rise in hard coal prices in world markets to make its deep shafts in the Ostrava and Karvina region profitable.

Under the deal, holders of the firm's 500 million euros secured 2018 bonds will get up to 60 million in a cash tender priced at 75 cents on each euro of face value, 300 million in new senior secured notes, and 115 million in new convertible notes.

Holders of the 275 million 2021 unsecured bonds will get 25 cents on the euro of bonds worth a nominal 120 million euros, and will be issued 35 million in new convertible bonds and 35 million in contingent rights, an instrument that will be paid in cash if coal prices rise to pre-determined levels.

The deal includes a total of 185 million euros in new capital - part of it from the majority shareholders - for the firm through a rights issue, equity placement to certain noteholders and a new super-senior credit facility.

The new shares will be priced at 0.65 crowns, far below current market value. Existing stock will be just 4 percent of the total equity after the new shares are issued.

The new shares will be traded from Sept. 30 and closing of the restructuring process is expected in early October.

(1 US dollar = 0.7606 euro) (Editing by Pravin Char and Mark Potter)

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