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Czech government eyes takeover of New World Resources unit to avoid collapse

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Czech government eyes takeover of New World Resources unit to avoid collapse

In bid to prevent its collapse, the Czech government is mullingtaking over New World Resources Plcunit OKD as, Reuters reportedApril 7, citing ministers.

The government has been hesitant to help the company, but itis concerned a potential collapse could damage the economy.

"It would be ideal … for the company to continue operatingwithout problems, laying off minimum number of miners and for the current ownersand creditors to leave," Finance Minister Andrej Babis said.

Owners could "hand over" the firm and creditors couldsell their debt for a "minimum" price, he noted. Other alternatives includeinsolvency.

Industry Minister Jan Mladek, meanwhile, offered the main ownersand creditors to sell the company and debt. The firm's principal owners and creditorsinclude Ashmore Investment Management Ltd., Gramercy Funds Management LLC and M&GInvestment Management Ltd.

The shutdown of mines could cost the Czech Republic €1.2 billionover the next six years, but restructuring would cut that loss by about half, astudy found.

New World Resources' net loss for 2015 widened to €223 million, from a net loss of €21 million ayear ago.