Troubled state owned coal miner Solid Energy's losses
ballooned to $335 million in its latest financial results,
released this afternoon.
The company said the result, a deterioration from its $40m
loss last year was largely down to asset write downs of
$215.3m and $102.2m in one-off restructuring, redundancy and
Underlying earnings dropped fell 78 per cent $22.2m which
chairman Mark Ford said was "a less than satisfactory trading
performance" even given the weak global coal market.
"But we do believe that Solid Energy has a good operating
future now that we have focused the business on cash
generation, and reduced and contained costs. The carrying
values of our coal assets are likely to remain low for some
time as we expect that international export prices will
remain depressed in the short- to medium-term."
Mr Ford said the write-downs "draw a line under those parts
of the business that no longer form part of our future, and
acknowledge that any future improvement in value will come
from our core coal mining activities.
"We have rigorously cleaned up the balance sheet to give the
refocused coal mining business its best chance to trade its
way back to profitability over time, and to repay the
confidence shown in us by our shareholder and funders."
The company wrote down the value of its Stockton mine - where
it has invested heavily in recent years - by $80m. It wrote
down the value of its mothballed Spring Creek mine by $53m.
The other big write downs were almost $24m on its underground
gasification plant at Huntly and $26m on its briquette plant.
The company's $22.2m in underlying earnings were well down on
the $99.7m last year.
Coal sales fell 11 per cent to 4.1 million tonnes, and prices
for hard coking coal - one of the company's key products -
also fell, from a high of US$221 a tonne in June last year to
US$130 a tonne for the same month this year.
Restructuring costs including redundancies totalled $46.7m.
Earlier this week the
Government announced a rescue package for the company, which
is struggling under a $380m debt pile and has shed 700 jobs
in the past year.
Most of its debt - $286m - is owed to the company's banks,
which will exchange $75m of that debt for shares in the
company. The company will also issue $25m in new shares to
the Government in exchange for $25m in cash.
Solid Energy this afternoon said the writedowns of its assets
and other factors had reduced its existing shareholders'
equity by $332m to $91.6m.
That means the company's banks may own as much as 40 per cent
of the company via their non-voting redeemable preference
shares if the restructuring deal goes ahead.
- by Adam Bennett of the NZ Herald