Last week, Solid Energy told The News it was looking at three options - liquidating the company, selling it, or coming to some arrangement to allow it to trade on.
Yesterday, Prime Minister John Key ruled out another Government bailout of Solid Energy. He described the company as being in a "precarious position" and said the Government and Solid Energy's board were working with banks to try and sort out the company's debts - currently around $320m.
"The least preferred option is liquidation but I can't rule out that at some point in the future that happens. It might happen if all the other things fall over.
"There are other options which would find more favour with the Government but the call is one that would be made by the bankers because it is essentially their debt."
Mr O'Connell said the Prime Minister chose his words carefully.
"You're not going to talk about debt restructuring publicly when you've got banks breathing down your neck."
Liquidation and orderly sale currently both meant the same thing - a 'fire sale', he said.
Solid Energy wouldn't make enough money from a sale to fully pay back its debt, nor would it be in a position to continue operating and pay back its debt by the due date in September 2016, he said.
"Our research shows [coal] prices aren't going to pick up until 2018-19."
Solid Energy would be better positioned to pay back debt then, however, the problem was, no one was going to wait that long, he said.
Without the debt, Solid Energy was making a profit, albeit a small one.
There was a lot of speculation around exactly how Solid Energy got into so much debt in the first place, but the fact was the company went on an investment spree at the time when coal was $300 a tonne, he said.
"They were investing in a whole range of ventures."
The top-level businessmen that allowed the company to take such a risk were "bloody irresponsible", he said. It was ultimately the Government's fault, for it demanded better returns from Solid Energy.
What the Government might try and do was broker some deal that kept the company operating, he said.
"Either the Government stumps up with some money or finds a solution."
It owed that much to the communities where Solid Energy operated.
Selling off Solid Energy's assets in their current state, and while coal prices were so low wasn't a wise move, he said.
"Why would some of those big international players buy New Zealand coal mines when they can extract a tonne of coal a lot cheaper in Australia - or Indonesia?"
The only reason they'd buy a Solid Energy mine was because it would be a bargain, he said.
From a community perspective, the Government needed to invest in Solid Energy, he said.
"[The community has] paid its way, it's paid its dividends."
He was confident the coal industry was still going to be around for the next 30-40 years.
"There is no replacement."
Today the international spot price for coking coal was US$85.80 a tonne, a small increase from the US$82.30 a week ago. A Solid Energy spokesman said the low price was due to a low demand and weak price for steel. There was a general oversupply of coal in the market, he said.
