July 2, 2014 / 7:37 AM / 3 years ago

UPDATE 2-Coal miner NWR seeks investors backing for revised capital revamp

* NWR revises capital restructuring terms

* Revision accepted by 62 pct senior secured noteholders, 37 pct unsecured

* Existing shares will only make up 4 pct of total after the equity raising

* May sell main business if doesn’t get enough support for restructuring (Adds share dilution, debt details, updates market reaction)

By Robert Muller

PRAGUE, July 2 (Reuters) - Czech coal miner New World Resources (NWR) made a new pitch to bondholders to back a capital restructuring plan but the scale of the dilution shareholders will suffer and its threat to sell a main business unit pushed its shares down by as much as 20 percent.

NWR, owner of the Czech Republic’s only hard coal mines and hit by a sharp drop in global prices in recent years and tepid demand from its steel industry customers, plans to cut debt and raise 150 million euros of new equity.

It had previously said that shareholders who did not take up a rights issue would be diluted, and said on Wednesday that existing shares will only make up 4 percent of total shares after the equity raising.

NWR said that, under the revised terms, a 30 million euro senior unsecured notes tender shall be at a fixed price of 25 percent of par. Other terms of the proposed capital restructuring remain unchanged.

The miner said the new terms have the backing of 62 percent of its senior secured noteholders, 37 percent of unsecured noteholders and majority shareholder BXR.

The deal must be approved by a majority in number and 75 percent by value of each class of creditor voting in person or by proxy.

The company said in a stock market filing that it will put its mining subsidiary and main business OKD and Polish business NWR Karbonia up for sale if the revised plan does not win enough support from share and bond holders.

“The board of directors believes that it is prudent to continue contingency planning in parallel with the implementation of the revised consensual transaction,” NWR said.

NWR has 825 million euros of debt, mostly in senior unsecured notes due 2021 and secured notes due 2018. It announced a conditional deal in June to cut debt to 500 million and secure new capital to stave off insolvency.

UNFAVOURABLE TO SHAREHOLDERS

Komercni Banka withdrew its share price target for NWR while keeping a “sell” recommendation after the revised terms, which it said hurt shareholders more than expected.

“The current target price... was based on the estimate of restructuring conditions which were much more favorable for current shareholders. Such conditions don’t seem to be realistic anymore,” Komercni Banka analyst Josef Nemy said in a note.

NWR had offered a consent fee to holders who would agree to the proposed terms by June 25. It said 77 percent of the senior secured noteholders and 40 percent of the senior unsecured noteholders had signed up by the deadline.

But those bondholders will have to enter the lock-up again under the revised terms by a July 11 deadline, NWR said.

NWR operates four mines producing coal used at steel plants and power plants. Its customers include steel firms such as ArcelorMittal and United States Steel Corp. It is a major employer in the country’s industrial north-east.

The miner narrowed its first-quarter loss to 26.7 million euros and pointed to signs of recovery in the market. The company, facing higher costs related to its mines than Polish and other peers, has struggled to re-align its business with contracted coal prices that have dropped by half in the past three years. (Writing by Jason Hovet; editing by Jason Neely and Foo Yun Chee)

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