Czech Government may buy debt-ridden NWR’s coal unit to save jobs

7 July 2014 (Last Updated July 7th, 2014 18:30)

The Czech Republic Government may buy New World Resources' (NWR) black coal unit, OKD, in an effort to prevent thousands of redundancies.

The Czech Republic Government may buy New World Resources' (NWR) black coal unit, OKD, in an effort to prevent thousands of redundancies.

NWR announced last week that it would have to sell OKD in Czech and Karbonia in Poland if it fails to reach an agreement with investors on capital restructuring by this September. The company is reeling under $1.12bn of debt.

Czech Republic Industry and Trade Minister Jan Mladek said the government would want OKD to be acquired by a strategic investor, preferably a company engaged in the same field.

The government intends to save around 14,000 jobs in OKD.

"NWR...would have to sell OKD in Czech and Karbonia in Poland if it fails to reach an agreement with investors on capital restructuring."

OKD operates four mines in the Czech Republic, which contributed to a major part of NWR's €850m revenue in 2013.

However, falling coal prices and an increasing use of cheaper and cleaner energy sources, such as natural gas, have hit the company's performance.

In the quarter ending in March, NWR's earnings were down to €26.9m from €110.2m year-on-year.

In September last year, OKD announced that it plans to close down the Dul Paskov mine at Frýdek-Místek in North Moravia by the end of this year, as the mine is uncompetitive and running at a loss. The Paskov unit employs 2,500 workers.

In June, NWR signed a deal with the government agreeing to keep the mine open until 2017, while the government would provide CZK600m to laid-off workers, reported Radio Prague.

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