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Founding of Polish Mining Group save ailing coal-mining sector

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The three state controlled firms join two state-owned investment vehicles and state owned coal exporter Weglokoks in the PLN 2.4 billion capitalization. Namely, state investment vehicle FIPP will pony up PLN 300 million, industrial restructuring vehicle TF Silesia will provide PLN 400 million and Weglokoks PLN 217 million.

Representatives of mining and energy companies as well as banks and financial institutions Tuesday signed a deal founding the Polish Mining Group (PGG) in an effort to save the country’s ailing coal-mining sector.

Prime Minister Beata Szydło and Energy Minister Krzysztof Tchórzewski attended the signing of the deal in the southern city of Katowice.

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It’s a symbolic start of the biggest coal producer in the EU, which will take over 11 mines owned by a defunct group Kompania Weglowa’s (KW), whose debts total nearly PLN 8.5 billion.

The deal creates PGG to replace KW with hopes that the group could turn back into the black by end 2017. Only three of KW’s remaining mines avoided losses in 2015 although two were not far from the mark.

Investors in PGG will include key Polish power firms PGE, Energa and the power wing of PGNiG natgas – PGNiG Termika which will each contribute PLN 500 million

The three state controlled firms join two state-owned investment vehicles and state owned coal exporter Weglokoks in the PLN 2.4 billion capitalization. Namely, state investment vehicle FIPP will pony up PLN 300 million, industrial restructuring vehicle TF Silesia will provide PLN 400 million and Weglokoks PLN 217 million.

Banks, together with Weglokoks, will take up bonds worth PLN 1.04 billion as part of a KW bond refinancing plan.

Of the PLN 1.04 billion debt sum, the five banks are signing up for an aggregate PLN 615.5 billion, of which PLN 307 million amortizing 2019 to 2023 and the rest is paid off in one tranche in 2026.

The five creditor banks are a mix of state-controlled banks including state bank PKO BP, state development bank BGK and indirectly controlled Alior Bank, plus non-public entities including Santander unit BZ WBK and BNP Paribas’ locally listed unit.

Last week KW management and its 13 trade unions signed an agreement, which enables transferring KW mines to PGG. Sides agreed that the so-called 14th salary will be suspended for the period of two years, while other elements of remuneration, including the annual December bonus and payment in kind, as well as employment terms will be left intact. By January 1, 2018 at the latest a new collective labor agreement is to be signed.

“This deal aimed at creating a strong mining unit, which will be a guarantee of the development of the Polish mining sector, and the base of the Polish energy sector is the move towards strengthening of the country’s energy security,” Szydło said. She called it a breakthrough day for Polish mining.

Source: Warsaw voice

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