OKD coal mines

In August 2016, PRISKO, a Czech government’s vehicle, provided a working capital loan facility to OKD, a hard coal mining company in bankruptcy. EEIP drafted an ex-ante expert evaluation of the financing facility, focusing on an issue whether and under what conditions the facility could be provided under the arm length principle. EEIP analysed, using detailed company’s cash flows, the seniority of the loan and the quality of provided collateral comparing them to the company’s actual liquidity needs until the loan’s maturity. The loan facility was expected to be maturing at the date of restructuring plan approval. At the later stage, EEIP supported PRISKO in defending the loan at the European Commission vis-à-vis the state aid rules pursuant to the pursuant to Articles 87 and 88 of the European Community Treaty (EC Treaty).

OKD is the only producer of hard coal (bituminous coal) in the Czech Republic. Its 3 deep mines are located in the southern part of the Upper-Silesian Coal Basin. In 2015, the company produced 7.6 million tons of coking and thermal coal. In 2015, OKD booked CZK 8 billion (EUR 293 million) in sales, employing over 10,000 people. In May 2016, the company launched restructuring process pursuant to the Czech Insolvency Act.

PRISKO is a joint-stock company fully controlled by the Czech government. The entity originally established for dealing with privatisation issues now finances certain companies in restructuring.