Thursday 21st February 2013
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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.
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