Final Word from Thursday, August 15, 2013



Zdeněk Bakala and his partners paid themselves €1.5bn in dividends from OKD prior to the IPO in 2008 and earned €1.2bn on the IPO itself. At the current share price, their remaining stake in NWR is worth only €153m. They've earned so much already that whatever happens to NWR in the future doesn't really matter to them financially. Bakala admitted this in Forbes, when he said that OKD represents less than 10% of his assets and doesn't complicate his life. Bakala is now repeating this same strategy of "legal tunneling" at RPG byty, which owns the 44,000 apartments spun off from OKD mines. RPG issued a €400m bond in April and will use it to pay an estimated €330m in dividends. No matter what happens to RPG Byty when NWR goes broke and thousands of people can no longer afford to pay their rent, it won't make much difference financially to Bakala and his partners, because they will have already cashed out. [Czech Republic New World Resources BXR RPGI Real Estate coal flats dividend recapitalization]

Glossary of difficult words

IPO - Initial Public Offering of shares on a stock exchange;

to tunnel - a Czech term for asset-stripping;

to spin off - to separate out or sell off part of a company to create another company;

to cash out - to exit an investment, usually by recouping the original cash investment or more.

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