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Creditors of Czech coal mining firm NWR seek government aid to avoid bankruptcy

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Creditors of Czech coal mining firm NWR seek government aid to avoid bankruptcy

Creditors of Czech coal miner New World Resources Plc are pressing the Czech governmentto provide state funds for NWR subsidiary OKDas to avoid bankruptcy, Reuters reported April 10.

The creditors, under the name Ad Hoc Group, own 60% of equityin NWR and two-thirds of the company's debt.

NWR needs government aid starting from May due to a precipitousfall in coal prices, creditors maintain.

"For OKD to avoid an unmanaged insolvency, it is necessaryto find already next week a solution and means for its financing from the end ofApril," Ad Hoc Group said in a statement.

The creditors are hoping to negotiate with the government.

The government is not keen to prop up a company that was previouslyprofitable and spun off assets, but recognizes that allowing the firm to go bankruptwould put 13,000 people out of work and indirectly weaken the country's economy.

The Czech government's ministers of finance and industry saidlast week that a governmenttakeover of NWR was possible, as well as bankruptcy or a restructuring. However,Minister Jan Mladek said the government would not bend to pressure by Ad Hoc Groupto act quickly.

Ad Hoc, which includes global asset managers M&G InvestmentManagement Ltd., Gramercy Funds Management LLC and Ashmore Investment ManagementLtd., extended a waiver on covenants last week, giving the firm until April 13 tohold discussions with the government.