October 22, 2015 / 4:13 PM / in 2 years

UPDATE 1-Poland pushes energy firms to invest in troubled mines

* Measures announced three days before election

* Coal mines struggling in politically sensitive Silesia

* Tauron to use stake in PKO bank as collateral (Adds more detail, background)

By Adrian Krajewski

WARSAW, Oct 22 (Reuters) - Three days before a parliamentary election, the Polish government has engineered a share swap to enable its No.2 energy producer, state-run Tauron, to buy an ailing coal mine in the south of the country.

Tauron said on Thursday it would issue non-voting shares carrying privileged dividend rights to the Treasury, in return for a 1.01 stake in state-controlled bank PKO.

The stake, worth 383 million zlotys ($100.2 million), is to be used by Tauron as collateral to help finance the purchase of the struggling state-controlled Brzeszcze coal mine.

PKO, Poland’s largest bank, dropped 1.62 percent on the news, while fellow bluechip Tauron fell 0.32 percent to hit an all-time low.

The centrist government is fighting to save the mainly state-run mining sector, situated mostly in the politically vital region of Silesia in southern Poland, as it heads into Sunday’s election. Polls suggest it will lose to the conservative, eurosceptic opposition.

The Treasury had to replace Tauron’s management to cajole it to buy Brzeszcze. The mine is one of four carved out of state-run Kompania Weglowa (KW), the biggest coal-mining firm in the European Union.

KW has been teetering on the brink of bankruptcy. Along with state-run coking coal producer JSW, it has been suffering under the weight of high costs and falling coal prices.

Last month, the state announced that utilities PGE, Energa and PGNiG are to help restructure the remaining 11 coal mines owned by the Silesia-based KW, supplier of nearly half of the coal burnt by Polish energy groups.

Earlier on Thursday, another state-controlled utility, Enea , said it had secured control over privately owned miner Bogdanka, while the Treasury said it expected an energy sector buyer for KHW, which closed 2014 with a net loss of 467 million zlotys. ($1 = 3.8241 zlotys) (Reporting by Adrian Krajewski; Editing by Mark Trevelyan)

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