Solid Energy on knife edge
PM reportedly sees liquidation as not government's preferred option
State-owned coal miner Solid Energy’s future is on a knife edge as Prime Minister John Key is reported saying liquidation is not the government’s preferred option for the “precarious” company.
The comments were reportedly made at a press conference this afternoon.
Last week Radio New Zealand reported that the company was considering three options, one of which was liquidation.
It cited a Solid Energy statement saying: "In our staff updates, we have explained that there are three potential paths for the company under consideration – some arrangement that would allow us to trade on, some kind of controlled sell-down, or liquidation."
A decision was expected within weeks.
The company in May slashed 113 jobs from its big open cast mine at Stockton on the West Coast as coal prices slumped to $US83 a tonne.
In February it deferred filing its half year accounts “until the board of directors is confident the accounts reflect a true and fair picture of the company’s position,” it said.
Chairman Andy Coupe said at the time: ““We can see an issue coming. It is not about current performance or any immediate difficulty in meeting our commitments. It is about the impact on our balance sheet of future pricing for coal and our consequent diminishing ability to repay or refinance debt when it falls due from September 2016. We are acting early.”
Solid Energy owes its banks – ANZ, BNZ, Westpac, Commonwealth Bank, Bank of Tokyo-Mitsubishi UFJ and TSB – about $320 million.
Its perilous situation stems from aggressive expansion plans that relied on rising coal prices, leaving the company burdened with excessive debt when prices went the other way.
In October 2013, its lenders and the Crown agreed a restructuring package allowing it to continue trading. The deal converted $75 million of debt to equity and rescheduled bank term debt to mature in September 2016.
The government also provided $130 million of working capital facilities and $25 million of preference share finance.
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Solid Energy on knife edge
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