Polish coal miner JSW is considering a share issue, among other options, to rescue it from a liquidity crisis caused by record low coal prices, the Chief Executive Edward Szlek said.
JSW, the European Union's biggest coking coal producer, ran into trouble at the end of 2014 when its cash reserves were depleted by high costs and low prices and it had to put a planned eurobond issue on hold because of weak demand.
"A share issue is one of the conventional instruments which a company looking for capital could use. We are considering this as one of the solutions. We are focusing on the talks with the financial sector to find the best solution for our company," Szlek said in an emailed reply to Reuters questions.
He said JSW now had more than 500 million zlotys ($136 million) of cash, but said coal prices were unlikely to rebound soon.
"We are aware that either we will go for radical actions or we will face losing liquidity. We are determined not to let that happen," Szlek said.
This year, the state-run company was also hit by a strike, which translated into a loss of about 100 million zlotys in the first quarter.
To prevent a collapse, JSW's management has cut costs and is working on obtaining new loans.
Szlek also said he was optimistic about the result of JSW's talks with debt holders to postpone their put options on bonds the company issued last year.
In 2014, JSW issued zloty- and dollar-denominated bonds worth about $388 million. The debt holders have the right to demand their buy-out in July.
"We have good relations with our debt holders. Also our savings programme and efficient actions to secure liquidity were well received. I am optimistic about the result of the talks, although they are extremely difficult."
JSW, which plans to focus on extracting coking coal used in steel production, rather than on thermal coal used in power generation, is also considering merging its Krupinski coal mine with its Pniowek coking coal mine.
Coking coal makes up 70 percent of JSW's output. The rest is thermal coal, which commands a lower price due to oversupply.
Last month, local media reported that JSW was considering a gradual shutdown of Krupinski, which produces mostly thermal coal and employs about 2,800 people.
"We are considering a few options for Krupinski. The most likely one will consist of merging it with Pniowek mine in order to optimize the product range," Szlek said.http://www.reuters.com/article/2015/06/16/poland-jsw-mines-idUSL5N0Z21U520150616