Miner OKD needs 2016 cash lifeline to keep operating

Struggling mining company OKD will, according to company bosses need a loan of around 700 million crowns to 1.0 billion crowns to ensure its ongoing activities in 2016. Without such help there is a high likelihood that it will have to halt its ongoing operations.

Photo: archive of OKD

OKD spokesman Ivo Čelechovsky commented, according to the E15 daily, that state help is vital for the mining company to continue. He added though that it should have enough cash at its disposal to pay wages for June. Managers are also taking steps towards the closure of the Paskov mine, the most exposed mine from an economic perspective whose closure has long been on the cards with the only real question being how quickly.

OKD submitted itself a submission to go into bankruptcy along with the news that it owed around 650 creditors a total of around 17 billion crowns. It has assets of around 7.0 billion crowns.

The future course of the last major hard coal miner in the country, with output used both for production of coke for the steel industry and for power plants producing heat and electricity, is uncertain.

A reorganization of the company would offer some hope that at least some of the current mining operations could continue at least through a gradual phased out closure. That is the outcome favoured by the region and the government and the scenario where a cash lifeline of hundreds of millions of crowns comes into play.

The other avenue is a more brutal bankruptcy where the assets are put up for sale and the cash generated handed over to creditors. Some Czech and Slovak businessmen have expressed interest in acquiring the mining company and relaunching operations after bankruptcy but this is clearly a much more risky roller coaster ride with the state having a lot less control on the final outcome than under reorganization.

OKD general manager Dale Ekmark has warned that any closure of the mines or operations would make their eventual re-start much more costly and complicated. He also warned that an immediate closure would probably end up costing the state and region more than a reorganization which keeps at least some of the mines operational.

The next steps in determining the future of the mining company and the around 9,000 jobs immediately connected with the mines will be taken when the committee of creditors meets with that event now scheduled to take place on August 10.