Sharechat Logo

Solid Energy in talks with banks as finances deteriorate

Thursday 21st February 2013

Text too small?

Solid Energy, the state-owned coal miner whose chief executive quit this month, is in talks with its banks because of its deteriorating financial position.

The coal miner, which is carrying some $389 million of debt, is heading for a "significant" first half loss, chairman Mark Ford said in a statement.

"We are in discussions with our banks and Treasury on the debt and equity support required for future operations of the business," Ford said. "A restructuring and turnaround plan for the company is being prepared by the newly appointed board in support of these discussions."

Don Elder resigned this month after 12 years as CEO, following most of the company's previous board of directors and hundreds of staff out the door.

In August last year Solid Energy reported a $40 million loss for the year to June 30, the mothballing of the Spring Creek underground coal mine near Greymouth and an end to plans to extend the Huntly East mine in the absence of new contracts with its main customer, the New Zealand Steel mill at Glenbrook.

Writedowns of $151.7 million were included in the result, with further post-balance date writedowns yet to be declared.

Ford said Solid Energy's performance has also been hampered by weak world coal prices, which touched US$140 a tonne in September, down from US$224 a tonne in June.

"This coal market downturn has resulted in weak prices negatively impacting the company's operating results for the half year," he said.

State-Owned Enterprises Minister Tony Ryall said Solid Energy is facing "very significant financial challenges."

"The new chair and board are focussing on a return to a core coal business which is viable at current world prices," Ryall said. "The public is aware that there had already been restructuring at the company but more may be required."

Ryall and Finance Minister Bill English have called a press conference on the matter.

(BusinessDesk)

BusinessDesk.co.nz

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar sags after avalanche of data and central bank action
Fonterra board starts planning chair succession
Fulton Hogan keeps Australian civil construction unit
Time for congestion pricing has come - NZIER
Colliers defends KiwiBuild as 'far from a colossal failure'
Pushpay shares rise as cost-cutting upgrades earnings guidance
20th September 2019 Morning Report
NZ dollar weaker against British pound on EC president's Brexit optimism
Todd plans Kapuni drilling campaign
MARKET CLOSE: NZ shares gain; appetite for KFC helps Restaurant Brands hit record

IRG See IRG research reports