Beleaguered coal miner Solid Energy has just three years to
turn around its fortunes, after the Government and banks
agreed to a rescue package yesterday.
Once the high-flying state-owned enterprise was on the
Government's list of partial floats, but the global coal
price plunged and dragged down research and development
projects, the company's financial loss a year ago of $40
million ballooning out to $335 million this year, with asset
The refinancing package will cut Solid Energy's drawn bank
debt from $300.5 million to $239.3 million and its
medium-term notes from $95 million to $81.2 million.
Last week, Solid Energy announced it was mothballing its
contentious $29 million lignite-to-briquettes plant near
Mataura, and continuing to sell farmland it had bought around
Solid Energy chairman Mark Ford said it ''now has a
reasonable chance'' to trade its way back to a viable and
financially stable position in the next three years, after
which the restructured credit facilities come up for review.
Solid Energy has shed more than 45% of its staff in the past
year, down 769 from 1658 to 889 permanent and fixed-term
''Our commercial lenders and the Crown have given us a
lifeline, not a hand-out,'' Mr Ford said.
''The business now has to work very hard to complete the
turnaround that is required to return to commercial
viability,'' Mr Ford said.
The Crown will provide a secured working capital loan of $50
million and a secured mortgage-backed $50 million facility,
both repayable within three years, and a secured standby
facility of up to $30 million, if required. Solid Energy had
refocused business on three markets: domestic industrial and
commercial markets in the North Island; steel-making coal for
customers in India, China and Japan; and domestic industrial
and commercial markets serviced by its smaller West Coast
operations and by the New Vale Mine in Southland, Mr Ford
The five major banks are ...
The ANZ, BNZ, Commonwealth Bank of Australia (New Zealand
branch), Westpac New Zealand and the Bank of Tokyo-Mitsubishi
UFJ Ltd (Auckland branch).
• The banks, and note-holder TSB, will exchange $75 million
of Solid Energy's debt for $75 million of equity in
non-voting redeemable preference shares.