Lubelski Węgiel Bogdanka – Black Pioneer at the Stock Exchange

Within less than three quarters from the IPO, Lubelski Węgiel has become the first fully privatised mine in Poland.
Bogdanka is worth over 2.55 billion zlotys at the Warsaw Stock Exchange, and its market rate fluctuates around 75 zlotys. In June last year, when the company announced the issue price range of 42-48 zlotys, most analysts speculated that 45 zlotys would be the maximum possible amount.
The subscription price for Bogdanka’s shares was 48 zlotys, and reduction among individual investors reached 88.7 percent. On 25 June 2009, Bogdanka was the first Polish coal mine to debut at the Warsaw Stock Exchange, and earned 528 million zlotys. On that day, its market rate increased by nearly 17 percent, reaching 56.1 zlotys. In December 2009, the Treasury sold another part of its shares, and in March 2010 it disposed of its controlling interest for over 1.1 billion zlotys. Bogdanka became the first fully privatised mine in Poland.
The company was preparing for that for several years. Construction of the mine started in 1975, and it was launched in 1982. Then, it was occasionally flooded with water. In terms of profitability, it came last – the price of coal covered one third of the cost of its mining. In the early 90s the mine recorded multimillion losses and its liquidation was even considered.
However, the mine was taken out of debt – all interest and 40 percent of the debt was written off (nearly 150 million zlotys). Privatisation of Bogdanka was discussed from the mid-90s. However, in 2001, the procedure was cancelled. Then, it resumed in 2003 and was cancelled again. Success came eventually in 2009. Had that happened earlier, Bogdanka would have been the first coal company at the Warsaw Stock Exchange, but it was beaten by the Dutch New World Resources, which was listed in 2008.
The company emerged from the crisis unscathed, although the demand for steam coal (representing 100 percent of its production) decreased. In 2009, it earned a net profit of 190.8 million zlotys (compared to a net profit for 2008 of 156 million zlotys), with revenues in excess of 1 billion zlotys. Bogdanka is now focusing on expanding. An investment in the new mining field, Stefanów 2, estimated at 1.5 billion zlotys, is comparable to the construction of a new mine. In a sense, that is the case as the output from the new field will double the mine’s annual coal production by 2014, reaching 11.1 million tonnes. In May, the company will award several key tenders relating to Stefanów.
The person who brought Bogdanka on the stock exchange was Mirosław Taras, its President since 2008. Just before the debut, he joked that he was not stressed out, because he takes aspirin. Today, the President, formerly the Spokesman, and for years an employee of Bogdanka, a miner, and a graduate of AGH, the University of Science and Technology.
In his opinion, the listing of Bogdanka was a natural consequence of the strategy which the company wished to pursue. “We wanted to prove that a Polish coal mine, if it is well-organized and well-managed, can be a good business with long-term development perspectives”, says Taras.
“By going on the stock exchange, we also wanted to generate resources for implementing the scheduled investments. We managed to do that by adjusting the company to the highest market standards and due to determination of the team who worked on the project. We had the support of our staff and experienced advisors. We took that risk in the midst of the crisis, because we believed in the opportunities created in that situation”, he adds.
According to Taras, Bogdanka had such a spectacular debut for a mine, because it had gained the trust of investors in its development plans – doubling the production and increasing the share in the Polish coal market.
“The full privatization of Bogdanka that followed, as a result of which all shares were subscribed for by financial investors, is another expression of trust and belief that we can do business on coal”, says Taras.

Karolina Baca
29-04-2010 Rzeczpospolita
http://www.rp.pl/artykul/309904,468322_Lubelski_Wegiel_Bogdanka___czarny_pionier_gieldowy.html