A year ago Ministry of Treasury ordered Jastrzębska Spółka Węglowa to buy Knurów-Szczygłowice mine from Kompania Węglowa. The goal was simple: KW needed cash for current operations, but JSW was also suppose to gain some profits from this transaction. Since the mine was quite prospective, Jarosław Zagórowski, who at the time was JSW’s CEO was full of optimism, declaring even raising salaries for the employees. 12 month after JSW is struggling with financial problems caused by this acquisition.
Knurów-Szczygłowice was the mine with the largest production among all the other facilities in Kompania Węglowa, but the employees were unsatisfied from their salary, since some mines were paying better while being in worst condition. JSW was suppose to fix that, but labor unions were complaining that Management Board is reluctant to even sit down for negotiations over the salaries, which eventually led to Zagórowski’s forced resignation earlier this year.
Back in summer 2014, when JSW was about to acquire the mine, the company had to issue bonds for financing the transaction. Bonds were bought by Dutch bank ING. One of the terms in the agreement stated, that until 30th July JSW will again issue bonds on the international financial markets. In case if it wouldn’t, ING would call for bond redemption (200 million PLN).
Since JSW did not issued bonds before the deadline, ING decide to remind them about their rights covered by the contract. JSW asks for some more time (till October), but ING stands still on their position. Would it lead to deterioration of already alarming situation in JSW?
COMING NEXT WEEK: PART TWO OF THE STORY ON AUSTRALIAN INVESTORS + SHORT COMMENT ON RECENTLY ONE OF THE MOST ACTIVE PARTICIPANTS ON THE POLISH COAL MARKET – MINES RESTRUCTURING COMPANY.