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NWR hit by downgrade from S&P

World Coal,

Ratings agency Standard and Poor’s (S&P) has cut its long-term corporate credit rating on Czech coal miner New World Resources (NWR).

S&P has cut NWRs rating to ‘CC’ from ‘CCC” and put a negative outlook on the firm after it announced terms of a capital restructuring offer.

NWR has experienced six consecutive quarterly losses from a continuous slump in coal prices. There have recently been reports that controversial Czech billionaire, Zdenek Bakala – who made much of his fortune with NWR when the mining company was in its heyday – will come to the miner’s aid. Bakala agreed to restructure the debt of NWR, with his company BXR Group pledging to provide € 185 million of additional capital for new shares.

However, analysts have remained skeptical about the chances of such a deal going through, with analysts at Erste Group Bank saying “It’s not sure that the proposed [Bakala] transaction will be realized, given that the company needs an approval from 75% of bondeholders in each tranche.”

S&P has also cut the rating on NWR’s secured notes to CC, while its raiting on unsecured notes dropped from CC to ‘C’.

"We consider this exchange offer to be distressed, rather than opportunistic, and caused by NWR's 'weak' liquidity, as our criteria define the term," S&P said.

"In our view, without a material rebound in coking coal and thermal coal prices, NWR's credit metrics will remain unsustainable after the capital restructuring," the agency concluded. 

Written by Sam Dodson

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