* Q4 net loss 466.1 mln euros, revenue down as expected
* Cuts saleable coal reserves by 65 pct because of weak
* Capital structure review still at early stage
* Shares touch record low
By Jason Hovet
PRAGUE, Feb 13 Czech coal miner New World
Resources (NWR) reported a record 466.1
million-euro ($633 million) net loss in the fourth quarter, due
to a big impairment charge related to a sharp fall in coal
The miner is in the middle of a restructuring to sort out
its finances that are under strain from the low coal prices and
weak demand. It ended 2013 with net debt of 625 million euros.
NWR's loss for continuing operations was 12 times more than
the average estimate in a Reuters poll. The company also cut its
saleable coal reserves by around 65 percent to 64 million
Its shares fell 9 percent in Prague to a record low of
NWR runs four hard coal mines in the northeast of the Czech
Republic and has fallen into deep losses because of sinking coal
prices and slack demand from steel sector customers such as
ArcelorMittal and United States Steel Corp.
The company began a review of its balance sheet structure in
January and appointed Blackstone as an adviser. The group
met 2013 cost savings goals and sold its coking business for 95
million euros in December. It also plans to shutter one mine at
the end of the year.
"We have done a lot to try to counter the negative impact of
the declining market but all this combined saves about 200
million euros and that doesn't fully outweigh the pricing
development," Chief Financial Officer Marek Jelinek said.
"The market is still not in a good place."
Jelinek said the capital review was still at an early stage.
NWR has met with shareholders and bondholders, which hold two
bonds due in 2018 and 2021 worth 775 million euros.
He declined to say what form any deal could take. Analysts
have said a debt-to-equity swap may be necessary. Majority
shareholder BXR, a private investment group, has already said it
was ready to invest new equity into a revamped capital
NWR is not alone in its struggles. Polish miners are also
suffering from record low coal prices as economic slowdown has
forced customers to cut production.
But for NWR, some signs of a steel market recovery are
appearing. Earlier this month, ArcelorMittal, the world's
largest steelmaker, said it expected the European market to
improve after two years of decline.
NWR aims for production and sales of 9-9.5 million tonnes in
2014 after 8.8 million and 9.7 million tonnes, respectively, in
2013. NWR also wants to cut its mining costs, which were 68
euros per tonne in the fourth quarter.
"We know this market will turn at some point," Executive
Chairman Gareth Penny said. "At the point that it does turn, if
we can get our cost down to 60 euros a tonne, get our CAPEX
below 100 million ... and have a revised capital structure, I
think the business will be in reasonable shape."
NWR said last month first-quarter average coking coal prices
fell 7 percent to 91 euros a tonne - and are down around a third
in two years - and 2014 thermal coal prices also fell.
NWR booked a 497.3 million-euro non-cash impairment in the
fourth quarter, contributing to a fifth straight quarterly loss
and bringing its total charge for 2013 to 807 million euros.
Revenue fell 18 percent to 216.1 million euros, in line with
expectations in a Reuters poll.
NWR had cash of 184 million at the end of 2013, down 31
percent on the year. Jelinek said the cash position was a buffer
for this year.
"Even if the market stays where it is, this year is not a
problem," he said. "But clearly the market is not supportive at
the moment and that is one of the reasons why the capital
structure review is in progress."