I am writing to you to express my concerns. I believe that the NWR is making active steps to drive down the value of all capital instruments.
I think the best example is the announcement of the revision of the capital structure and appointment of Blackstone and White and Case. The process was highly unusual. Normally, the company would first announce a decision to work on revising its capital structure and only than would seek outside advisors. The reason is that a beauty parade of advisors is likely to lead to leakage of such very price sensitive information. The leakage of the information would lead to speculations on the drop of prices of capital instruments issued by the company. Large short selling would affect share and debt prices. And this is exactly what happened in this case. I understand that this information was leaked to London investment community. I was told by one London hedge fund manager that they knew for a long time before the announcement that NWR is looking for advisors to revise its capital structure. NWR is majority owned by Mr. Bakala and Co. Mr. Bakala does not make mistakes like this. If it was not a mistake, it might have been an intention. Strategy to drive down NWR capital instruments.
I believe it should be investigated, whether insider dealing have occurred. I have raised the issue with:
- Nick Tassel, Blackstone Compliance officer
- FCA
- Capital Market Supervision at the Czech National Bank.
Similarly I was quite surprised by the way the company announced the very significant reserve revisions. It was surprising, that the announcement did not include any information that would increase investor comfort - for example who did the JORC report, and what was the assumed coal price for the reserve assessment. If such information would be provided, an investor could make an assumption on the future coal prices and than take a view on this reserve assessment. Another significant information would be how the assumed coal prices were derived. It was one of the most significant information in the presentation and the company devoted just a small fraction on one page. I have been around for three decades and I believe that the announcement was made in a way to maximise the negative effect of the news, which I believe is wrong.
On the positive note:
- The Czech government has established a commission under Minister Mladek to find a resolution to high unemployment in the NWR region. It is known in the Czech republic, that Minister Mladek is a very good friend of Bakala. Mladek helped Bakala before. For example they worked together on the the IPB takeover for the benefit of CSOB. Even before his appointment Mladek stated, that if he would be appointed Minister of Economy that he would push for the government to step in and help with Paskov mine to prevent unemployment acceleration. The government plans to underwrite NWR losses from Paskov mine. They are now structuring the transaction to maximise the likelihood to get this through the EU commission.
- The coal prices are stabilising both in the US and in Asia. I believe Europe will be stabilising soon.
- Europe will be pushing for higher use of shale gas to limit its dependence on Russian gas, which should increase gas prices globally. Coal prices will follow
- On the latest call the NWR financial ...
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