• Czech Coal Group
• Czech Coal a.s.
• Vršanská uhelná a.s.
• Litvínovská uhelná a.s.
• Dceřiné společnosti

Extraction sites to be independent companies in the Czech Coal Group

Most, 23 October 2008 – Upon the Board of Directors’ proposal, the General Meeting of Mostecká uhelná a.s. has decided to divide Mostecká uhelná a.s. by way of a spin-off with the establishment of two new successor companies. The ČSA extraction site will be managed by Litvínovská uhelná a.s., while the other site, Vršany, will be managed by Vršanská uhelná a.s. The existing Mostecká uhelná a.s., the name of which within the Czech Coal Group will be changed at a later stage, will provide shared services to the extraction companies.

The Group is switching over to management arranged by its extraction sites. The motivation is to achieve higher efficiencies in the business of each of the companies and of the whole Group and to facilitate development projects. The successor companies, Litvínovská uhelná a.s. and Vršanská uhelná a.s., will follow different strategies due to the different advancement of coal mining, caused at each site by the mining limits and different parameters of the coal found in each locality.

Vršanská uhelná a.s. will operate the Vršany site, which holds coal reserves with the longest life span in the Czech Republic within the existing mining limits. Extraction can go on until 2058, and this site is therefore able to supply coal to a new energy generating plant intended to replace some coal fired power stations and heat & power plants drawing near the end of their service life. The site contains some 333 million tonnes of coal to be recovered. Vladimír Rouček has been appointed the company’s CEO.

Litvínovská uhelná a.s. will manage the Československá armáda (ČSA) site. Beyond the mining limits, this site holds the largest coal reserves in the Czech Republic. In view of the situation on the energy market and customers’ demand for high-grade brown coal, the Czech Coal Group is keen to maintain the life of this site for as long as possible. The coal reserves on this site, within the mining limits, contain 48 million tonnes of high-grade brown coal with a calorific value of 17.5 MJ. Beyond the mining limits another more than 750 million tonnes of brown coal with the highest calorific value in the Czech Republic can be found. Given the current situation, when the option to exceed the limits continues to be challenged, the Czech Coal Group is preparing a timetable of reducing and temporarily stopping extraction from the ČSA site. As early as after 2012 the volume of production at ČSA will have to drop to one half of the current level, i.e., approximately 2.5 million tonnes a year. If the opinion on the mining limits does not change, extraction at this site will have to be suspended in 2021. Petr Kolman is the company’s CEO.

The existing Mostecká uhelná a.s., the name of which within the Czech Coal Group will be changed at a later stage, will provide a number of shared services to its affiliated companies. In addition, it will manage and administer all subsidiaries, including a new subsidiary that will, effective from 1 January 2009, come into existence by a demerger of the maintenance section with a view to offering its services also on the external market. Ivan Ondřejka is the CEO of the current Mostecká uhelná a.s.

The ownership structure of the Czech Coal Group will remain unchanged. Without any changes of the conditions, also the Czech Coal Group’s offer to indemnify property and land owners in the cadastre of Horní Jiřetín in the event that its relocation project is carried out will remain open until 30 June 2009.

For the employees, the establishment of new companies will mean the passage of all the rights and obligations that they have vis-à-vis Mostecká uhelná a.s., i.e., including all the employee benefits; the entire MUS Collective Agreement will be assigned.

The MUS Division Project addresses the settlement of liabilities to suppliers and customers. The project outlines in detail the specific obligations that will pass to the respective specific successor company. The relevant provisions of the Commercial Code also suggest that every successor company is liable for the obligations that have passed to it as a result of the MUS division.

The establishment of the new companies does not alter anything in the Czech Coal Group’s responsibility to town halls and residents of the region. Affiliates will take over the activities that Mostecká uhelná a.s. has been carrying out so far.

Contact:
Liběna Novotná
Spokesperson
Czech Coal a.s.
Tel: +420 476 203 140
GSM: +420 602 230 795
l.novotna@czechcoal.cz, www.czechcoal.cz

The Czech Coal Group includes Czech Coal a.s., a trader in energy commodities, mainly brown coal, electrical energy and greenhouse gas emissions allowances, and Litvínovská uhelná a.s., responsible for the Československá armáda extraction site, Vršanská uhelná a.s., responsible for the Vršany extraction site, and the currently existing Mostecká uhelná a.s. that provides a range of shared services. The Group also includes a number of service companies and holds equity interests in regional heat & power plants.