London-listed NewWorld Resources Plc said May 3 that its main coal-mining unit,OKD a.s., filed abankruptcy petition in a Czech court, claiming Europe's first major coal-sectorscalp amid one of the worst-ever market downturns for the fuel and steel-makingingredient.
New World Resources said OKD's bankruptcy filing came afterdiscussions with the Czech government and a group of major creditors "madeno meaningful progress."
The company failedto convince creditors to extend a debt moratorium in April, while the Czechgovernment also refused to help in adebt restructuring.
New World Resources had €299.3 million in net debt as ofDec. 31, 2015, and produced approximately 8 million tonnes of coal last year,according to SNL Metals & Mining data.
Creditors and equity holders had also been hoping for thegovernment to step in with a rescue deal.
Like other coal producers, the company has been hit by lowcoal prices across Europe, as stricter environmental regulations wereimplemented across the EU, prompting power companies to switch from coal tonatural gas.
European thermal coal prices fell to about US$37 per tonnemid-February, the lowest price since at least 2007, according to Bloomberg, buthave started to recover since then.
The bankruptcy of OKD followed similar events in the U.S.,where competition from gas producers and increasing mining costs havecontributed to a string of major North American coal sector insolvencies.
Peabody Energy, one of the largest coal companies in theU.S., filed for bankruptcyprotection April 13, while Arch Coal Jan. 11. About 50 coal companieshave fallen intobankruptcy since 2012.
SNL Metals &Mining is owned by S&P Global.