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Poland is pressing ahead with its biggest proposed privatisation of the year, with a drive to raise up to 5.8bn zlotys from the flotation of JSW, the European Union’s biggest coking coal producer.

But the plan to list up to a third of the company at up to 146 zlotys a share by the end of the month faces tough challenges – difficult world markets, prickly labour unions and the memory of last month’s lacklustre BGZ bank privatisation.

At 146 zlotys, JSW would be worth $5.7 billion, which would make it one of the largest companies on the Warsaw Stock Exchange. It would go a long way towards meeting the government’s 15bn zloty privatisation target for 2011.

But, with risk appetite waning globally, Warsaw’s market is down nearly 2 per cent this month. While it is still 3 per cent up on the year, JSW’s backers, who plan to price on June 28, are clearly sailing into some stiff headwinds.

About 15 European IPOs have been pulled this year and others have gone badly, including the sale of BGZ, where the Polish government sold only 12 per cent instead of a planned 37 per cent, and only at 60 zlotys a share instead of a minimum 66 zlotys.

While natural resources in general and coal in particular are much in demand in today’s world, JSW comes with a lot of baggage. The privatisation was blocked by powerful trade unions representing the 22,000 workers. They finally gave their support last week after winning numerous concessions from management and government officials, including 10-year job guarantees and a salary increases.

Private investors will have anything but a free hand: JSW employees will own nearly 17 percent of the company after the listing, with the state controlling the remaining 50 percent.

Related reading:
Polish miners: showering in cash, FT
Polish Coal: IPO plans won’t be easy, beyondbrics

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