Solid Energy restructuring plan on shaky ground

Solid Energy's future appears less certain than the information released by the company yesterday on its debt restructuring by banks and a noteholder.

In addition to the $100 million Crown bail-out and and further stand-by facility, five banks and a noteholder must accept redeemable preferance shares in lieu of $75 million debt.

However, the Bank of Tokyo-Mitsubishi UFJ Ltd, understood to have exposure of about $30 million, did not agree to the deal and a fortnight ago lodged a challenge to it in the High Court at Auckland.

In announcing the restructuring package, Solid Energy chairman Mark Ford made no mention of the challenge, other than to say ''certain of the arrangements are still subject to legal challenge''.

Finance Minister Bill English raised the prospect of a successful challenge ending in Solid Energy's receivership.

When contacted, Solid Energy stockholder relations manager Vicki Blyth said legal advice was that Solid Energy had secured the financial package, as 75% (by value of the entire debt) of the banks had agreed.

Finance Minister Bill English said ''as far as we're concerned the deal is proceeding'', the New Zealand Herald reported.

He has said Bank of Tokyo's legal challenge had little chance of succeeding, but if it did there would be no choice but to put the company into receivership.

''If the compromise is scuttled, Bank of Tokyo run the risk of losing all their money.''


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