UPDATE: JSW in difficult talks on restructuring; seeks to obtain external financing

"Outside the area concerning the capital group, where we have a direct influence on what we propose and what we will enforce, in the case of the State Treasury, the social side and financial institutions, the talks are difficult, but they are being conducted consistently and I am convinced that we can achieve our goal," acting CEO Oleksy said at the press conference.

JSW announced that one of the pillars of the group's restructuring plan is to reach an agreement with the social side, which is key to implementing changes in labour costs, employment organisation and remuneration rules.

"I still believe in the wisdom of our staff, and I believe that we will reach an agreement, but these are very difficult negotiations," JSW's acting CEO pointed out.

He said that the current talks with the social side concern the issue of limiting the Miner's Day bonus, suspending the payment of the so-called fourteenth salary and developing a different method of calculating sick pay.

"These negotiations are extremely difficult because our expectations regarding labour cost reduction are high," Oleksy stressed.

When asked whether JSW would pay its employees the so-called Miner's Day bonus, he replied that this is a difficult question to answer.

"We are conducting liquidity tests on an ongoing basis and, given that we have had negative cash flows for a long time (...) I believe that at this point, the decision to pay the bonus is fraught with high risk. Despite the fact that other companies will be paying it, including the Polish mining group PGG, we identify this as a high risk and have not yet made a decision."

As Boguslaw Oleksy pointed out, in the short term, an important element of support is the inclusion of JSW in the act on hard coal mining functioning, which allows for the coverage of costs related to miners' leave and one-off severance payments.

"We hope that this act will come into force by the end of the year and that we will be able to benefit from it. This legislative period is not helping us, because depending on when the act finally comes into force, we will be able to plan next year's cash flows precisely," he said.

The draft act initially provided for mining leave for over 3,000 employees and one-off severance payments for 700 people working at JSW.

"The legislative process is ongoing, and we will try to increase this number, especially for one-off severance payments," acting CEO Oleksy said.

He added that the number of applicants may increase following the recent agreement to suspend employment guarantees for several groups of employees.

JSW's acting CEO continued that one of the objectives is to adjust the financing structure to the company's capabilities and restructuring plan. Another goal is to restructure the current debt.

JSW is also analysing the possibilities of obtaining external capital support.

When asked whether any capital support from external entities is being considered, Oleksy replied that the company, analysing its situation, is considering capital support from other sources.

"These analyses must be market-based, but they are being conducted and the possibilities of obtaining funds are being examined, especially in the context of the European approach resulting from ESG and taxonomy. This severely limits the possibilities," he pointed out.

JSW's Oleksy stressed that the company is penetrating markets in order to obtain external financing.

"Hence our determination when it comes to costs and restructuring, because potential investors or financiers will want to see the company in a way that ensures the effectiveness of the business to be financed. Such work is ongoing," he added.

The acting CEO of JSW announced that the funds from the group's closed-end investment fund (Polish: FIZ) have not yet been exhausted and are planned to be used in December.

"We will probably have unused funds amounting to approximately PLN 100 million. (...) We must ensure that the funds are generated by our current operations. We have no influence on the market, hence our determination when it comes to cost," Oleksy pointed out.

"We have to reduce costs so that these activities generate profits. We are working on launching other sources. We have the support of the owner. I expect this support to materialise at the right time and that we will not have any liquidity problems at the beginning of the year," he added.

As part of the reorganisation of the group, JSW plans, among other things, to create two mining centres, reduce CAPEX and sell assets.

"We want to restructure the group significantly and reduce the number of companies that are essential to us. These will only be companies related to supporting our core business," the acting CEO stressed.

"Our actions will be swift and, it would seem, drastic for some, but the group must undergo a process of rapid downsizing," he added.

pel/ ao/ han/