Sifting of OKD creditors’ claims sets stage for key decisions about mining firm

Photo: OKD

The battle over the future of hard coal mining company OKD has just got a lot more complicated and bitter.

Photo: OKD
The reason is the decision of an Ostrava court Wednesday to largely following the recommendations of insolvency manager Lee Louda and throw out around half of the 20 billion crowns in claims from creditors against the mining company.

The most significant single move from that clean out of claims is the reject of around 10 billion from the bank Citibank.

Citibank was one of the leading members of the grouping of foreign investors known as the Ad Hoc Group, which had before the insolvency declaration had been the decisive force in New World Resources (NWR), the biggest single shareholder in OKD.

That influence resulted from the purchase of NWR bonds in the past and the transformation of some debt into bonds. But insolvency manager Louda questions whether the major creditor has in fact proved that these debts really stemmed from mining company OKD and the court has taken on his arguments.

Citibank can still go to court to get its claims recognized and can also launch an international arbitration against the Czech state, something which it has strongly hinted it is more than willing to do.

Other claims from creditors were also dismissed on Wednesday, for example a 1.8 billion crown claim from the Ministry of Industry and Trade for the likely liquidation costs of closing the deep mines if operations at OKD cease once and for all.

Photo: Daniel Burda, Czech Radio
The sifting of claims for now leaves Advanced World Transport as the biggest creditor with around 460 million crowns in recognized claims. AWT was formerly OKD Transport, though they are now totally separate companies, and is one of the biggest rail cargo firms in Europe.

The latest court moves on Wednesday effectively deal out the cards ahead of a key meeting of creditors on Thursday at which the next steps for OKD should be decided. Basically OKD is faced with the fundamental choice of bankruptcy and the sell off of assets with no little regard whether mining operations continue there or a restructuring of the company. The Czech state has said clearly that it would prefer the latter option that would offer the prospect of keeping at least some mining operations going and salvaging some of the 12,000 jobs linked to the mining company. It will be closely following the outcome Thursday.