Six companies in Poland have signed an agreement to invest $620m in the newly established Polish Mining Group (PGG) in a bid to save Kompania Weglowa from bankruptcy.

Due to low coal prices and high labour costs, Kompania is said to be on the verge of going bankrupt and is expected to run out of money this month if no agreement is reached.

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Even after several trials, Poland’s previous PO-led government could not agree a rescue plan for the company, Platts reported.

Finally, the country’s new PiS government managed to convince energy companies to support Kompania.

"The creation of PGG is a very important, but only the first stage of organising and restructuring of the coal industry in Poland."

Under the agreement, state-controlled utilities Energa, PGE, and PGNiG will each purchase shares worth PLN500m ($128m) PGG, which plans to acquire 11 mines and employ 32,500 workers from Kompania.

State fund FIPP will invest another PLN300m ($76m), while TF Silesia and Weglokoks will convert their Kompania debt worth PLN617m ($158m) into PGG shares.

Lenders such as PKO BP, BGK, Alior Bank and BGZ BNP Paribas and BZ WBK will subscribe for new bonds worth PLN615.5m ($157m) by participating in refinancing of Kompania’s debt.

PGG is expected to break even in late-2017.

Kompania Weglowa said in a statement: "The creation of PGG is a very important, but only the first stage of organising and restructuring of the coal industry in Poland.

"On the government’s plan for the mining industry consists of the sale of coal to regulate the market, reducing price competition between mining companies, the introduction of legislation that will reduce the cost of extraction and the restructuring cost in each of the mining companies."