May 3, 2016 / 1:31 PM / 3 years ago

UPDATE 2-Czech miner NWR's main business files for insolvency

* Latest miner to be hit by coal price slump

* OKD aiming for government talks over aid

* Says will meet customer obligations (Adds minister reaction, more details)

By Jason Hovet and Jan Lopatka

PRAGUE, May 3 (Reuters) - The main business of Czech coal miner New World Resources (NWR) filed for insolvency on Tuesday after failing to secure government aid, but could still agree a reorganisation plan to stay afloat.

The business, OKD, which owns the country’s only hard coal mines, is the latest miner worldwide to seek creditor protection amid slumping prices.

Loss-making OKD said in its insolvency filing that it owed 17 billion crowns (629.01 million euros) and held assets worth less than 7 billion crowns. Most of its debts are guarantees for the parent company’s bonds and loans which could become payable prematurely due to breaching debt terms.

“Although this was a very tough decision to make, this voluntary step is the right choice for the future of OKD, and mainly its employees and the region,” Chairman Dale Ekmark said.

OKD said it did not have enough money to cover its liabilities but expected to receive payments from customers to maintain operations and pay wages. OKD employs nearly 10,000 staff and 3,000 agency workers. Major customers include steelmaker ArcelorMittal’s Czech plant and U.S. Steel’s Slovak plant.

The group also said it would meet orders while preparing a restructuring plan involving the closure of multiple mines.

NWR warned last week OKD would run out of money by the middle of May unless the Czech government and company creditors agreed a takeover or restructuring deal.

The government has rejected any deal that would benefit the company’s owners and debt holders but has not completely ruled out taking it over.

Prime Minister Bohuslav Sobotka said keeping the largest number of miners in work was a priority, and ministers would meet to address the situation on Wednesday.

Coking coal prices have dropped around 60 percent since 2011 and NWR has been unable to make big enough cost cuts to cope.

NWR, which went through an equity and debt overhaul in 2014, was valued at 3.5 billion pounds when made its London and Prague stock market debut 2008. It is currently worth some 8.8 million. Its shares fell around 25 percent on Tuesday after the insolvency announcement.

The group’s bondholders Ashmore Investment Management Limited, Gramercy Funds Management LLC and M&G Investment Management Limited became its main shareholders earlier this year when majority shareholders, including Czech investor Zdenek Bakala, gave their shares to the company for free.

OKD is a guarantor of NWR’s debt, which includes an 8.0 percent bond due in 2020 with 334 million euros outstanding and 4.0 percent convertible bond worth 150 million.

According to the insolvency filing, OKD also owes 64.7 million euros to its parent companies. ($1 = 23.4120 Czech crowns) (1 euro = 27.0266 Czech crowns) (Editing by Mark Potter and Jane Merriman)

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