Solid Energy plan to invest

Troubled state-owned coal miner Solid Energy is looking to the future and a reinvestment in its key coal mining regions once there is a sustained improvement in the market.

The company, which is subject to a restructuring deal, reported an operating loss of $205.6 million for the year ended June, substantially down from the $44.9 million profit reported in the previous corresponding period (pcp).

Once impairments and tax had been added to operating earnings, the loss blew out to $335.4 million compared to a pcp loss of $40.2 million.

Operating cash flow was negative $49.8 million, shareholders' equity was down to $91.67 million and the gearing ratio had soared to 81% from 42%.

Chairman Mark Ford said the company's recovery would depend on continuous improvement, coupled with better international coal markets which could take three years.

''The impact of change and restructuring on our employees, and on regional communities, throughout the year has been as severe and as far-reaching as any in the company's 100-year plus history.

''While our focus is on paying off debt and further reducing costs through greater efficiency, we hope to be in a position to reinvest in our key coal mining regions once there is a sustained improvement in the market.''

Solid Energy had a good operating future now it was focused on cash generation and reduced and contained costs, he said.

The carrying value of coal assets were likely to remain low as international export prices would be depressed in the short to medium-term.

Last week, Finance Minister Bill English proposed a restructuring deal for Solid Energy including $25 millon cash from the Government. Banks which lend to Solid Energy would be required to inject $75 million in return for non-voting redeemable preference shares.

At a glance

• Reported loss of $335.4 million for June year.
• Revenue of $631.1 million, down 35% as average US dollar prices received fell 34% in the year.
• Asset impairments of $215.3 million and one-off costs of $102.2 million.
• In the year, 550 employees were made redundant.

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