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Financials

NWR creditors raise pressure on Czech government in rescue talks

PRAGUE, April 25 (Reuters) - Coal miner New World Resources said on Monday it was in default on part of its debt and would have to consider filing for insolvency at its main operating business unless the government and creditors agree on the firm’s restructuring by Friday.

The company, which employs 13,000 staff in the Czech Republic, has been hit by weak demand and low prices and has been in talks on a restructuring or sale.

The government has been reluctant to provide aid that would benefit NWR’s shareholders but also fears insolvency could lead to a collapse of the mining group, which would hurt the broader economy.

NWR said that unless there was an agreement by Friday it would have to consider the timing of a filing for the insolvency of OKD, its main operating business, and a shut down of OKD’s mining operations.

The default on a 35 million euro ($39.40 million) credit facility was triggered by the expiry on April 22 of a waiver on debt conditions provided by creditors. The creditors had previously extended the waiver but decided not to do that again.

“This expiry means that certain members of the group are now in default under their financial obligations - obligations that are guaranteed by (NWR production subsidiary) OKD,” NWR said.

NWR is controlled by a group of bondholders, known as AHG, which holds 60 percent of voting rights and about two thirds of the company’s debt. They have called for government assistance.

AHG had agreed to waive the debt conditions if there was a framework agreement between AHG and the government by last Friday.

NWR said the situation could lead to cross-defaults. The firm has two bonds, an 8.0 percent 2020 paper with 334 million euros outstanding, and 4.0 percent convertible bond worth 150 million.

AHG’s members are Ashmore Investment Management Limited, Gramercy Funds Management LLC and M&G Investment Management Limited.

AHG said on Sunday it had offered to sell the company, cleared of about 400 million euros in debt, to the state for less than 150 million euros.

NWR lost 4 million euros ($4.56 million) in 2015 on the core level of earnings before interest, tax, depreciation and amortisation. It ended 2015 with net debt of 298 million euros, and cash of 86 million euros. ($1 = 0.8883 euros) (Reporting by Jan Lopatka. Editing by Jane Merriman)

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