(Adds bond prices, details, analyst)
PRAGUE Jan 23 Shares in New World Resources (NWR) dropped more than 19 percent to a five-month low on Thursday after the loss-making Czech miner announced a major review of its capital structure.
NWR said late on Wednesday that its majority shareholder BXR was ready to invest new equity into a revamped capital structure and that it would consider all options as part of the balance sheet review.
Shares traded at 21.20 crowns at 0944 GMT on Thursday, down 14.7 percent. They have already lost 75 percent in the past year as weak coal prices and soft demand from steel customers pushed NWR into losses.
The yield on NWR's senior notes due in 2021 also jumped to around 50 percent from 30 percent.
"At the coal prices announced for the first quarter, they need to substantially decrease interest costs. So in other words, there should be some kind of debt-to-equity swap," Ceska Sporitelna analyst Petr Bartek said. "Now the question is, at what price?"
The miner, which has debt of around 825 million euros, announced on Wednesday a decline in contracted prices, with the average coking coal price down 7 percent to 91 euros a tonne in the first quarter and the average 2014 thermal coal price lower by 4 percent to 54 euros.
The company runs four mines in the Czech northeast and produced 8.8 million tonnes of coal in 2013, missing a 9 million tonne target estimated in November. It targets production and sales of 9.0-9.5 million tonnes in 2014.
"The sales targets together with lower prices indicate a drop in revenues in 2014, which is bad news given that in 2013 NWR probably ended in a deep loss," Komercni Banka analyst Josef Nemy said.
The company posted a 48.5 million euro third-quarter loss from continuing operations after a record 315.4 million euro loss in the second quarter, when it took a non-cash impairment charge of 307 million on mining assets.
It is due to report fourth-quarter earnings on Feb. 13. (Reporting by Jason Hovet and Robert Muller; Editing by Erica Billingham)