Something of a lifeline has been given to the last major hard coal mining company in the Czech Republic, OKD. The fate of the business and thousands of jobs at stake though is still though not certain in spite of positive recent results.
Seven hours of discussions were finally concluded with a vote by creditors of the OKD mining company to approve an action plan to restructure the business and continue mining. The reorganisation should see what’s salvageable from OKD being transferred to a state-owned company at the price of 80 million crowns. Most of OKD’s existing debts and a raft legal disputes surrounding the company should stay with the company.
The vote is seen as a victory for the existing OKD insolvency management and unions pushing to safeguard around 8,000 direct jobs and a further 2,000 depending on continued operation of the handful of mines in the far east of the country. OKD is one of the biggest employers in the Moravia-Silesia region.
But there’s still a big question mark over the reorganisation with the Ostrava regional court still needing to give its final blessing to the shape of restructuring and weigh up the views of discontented creditors who would rather see an immediate shutdown of mining operations and sell-off of assets.
OKD insolvency manager, Lee Louda, outlined on Thursday what the court still had to do:
ʺIt’s now up to the court to take a position for example on possible claims from creditors which have not been recognised so far or other comments which have been submitted to the court over the last days.ʺ
There’s another shadow as well; legal proceedings launched by British company Alcentra, owned by US group BNY Mellon, against its exclusion from making a bid to takeover OKD. That’s currently lodged with the European Commission.
Hopes for continued hard coal mining in the Moravia-Silesia region were given a boost on the eve of the creditors’ meeting with news from OKD that it made a profit of 2.28 billion crowns in the first half of this year.
Insolvency manager Louda said that translated into debt repayment at the level of 1.2 billion to 1.3 billion crowns a month under such conditions.
The hard, high quality, coal mined by OKD is used both as coking coal for the steel industry and for heating plants and electricity generation. Exceptional circumstances pushed world prices for coking coal to record levels of around 330 US dollars to the tonne in April but have since almost halved in what is a very volatile market. Prices though are still ahead of the levels which forced OKD to declare its could not continue as a going business back in May 2016.
The Czech government and region are hoping for a gradual run down of mining activities with the four currently operating OKD mines scheduled to shut in 2018, 2021, and 2023. That should give some time for the region to prepare and diversify economic activities.
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