Solid Energy has been in the news for weeks. In February the Government admitted the state-owned mining company was in crisis talks with banks about its $389 million debt pile. Hundreds of jobs have been cut and the operations of the company are under review. But how did it get to this point, and what happens next?
So what went wrong?
It depends who you ask. The Government, backed by Solid Energy's former management, says the situation was caused by a "perfect storm", a combination of an unexpected collapse in international coal prices, at a time when the Kiwi dollar stayed high. Former chief executive Don Elder said mining companies all over the world had been closing down high-cost mines.
But critics say the demise was partly of the company's own making, with an aggressive strategy based on the belief that coal prices would stay strong - a high-risk approach that was inappropriate for a state-owned company. West Coast miners claim the rise in coal prices in 2010 and 2011 was temporary, because mines in Queensland were flooded.
Were there warnings about Solid Energy's activities?
Plenty, as a major release of official papers on March 22 showed.
Trevor Mallard admitted that, when he was state owned enterprises minister in 2006, Solid Energy had a "rough and ready" style when it came to reporting, after it emerged it had spent more than $50 million buying land and mineral rights for a possible lignite future without telling the government. Treasury scolded the lack of consultation as "unacceptable". The project came to nothing, nor did the near-total failure of a rapeseed crop on dry land behind Omarama.
Then, in 2011, investment bankers at UBS were hired to see how ready Solid Energy was for a possible partial sale. They expressed "no confidence" in Solid Energy's business strategy, Treasury said, noting risky renewable energy projects and bloated cost structure.
Even Finance Minister Bill English admitted there were red flags and "numerous" decisions which, given hindsight, may have been unwise.
The UBS bankers asked the company what research it had done to support its view that coal prices would be much stronger than other experts in the market believed. They were given nothing, hinting that the company's view was based on no more than faith.
That view meant Solid Energy was willing to begin expensive projects which would generate cash only if the price was strong. When the coal price dropped, the fall was all that much harder.
Why didn't the Government step in?
The Government did take action. Solid Energy disputed the UBS report, so the Government asked it to review its strategy and commissioned an independent review, which backed UBS.
Ministers later rejected Solid Energy's revised business plan, because they saw the company's suggested actions, such as having no lunches at internal meetings, as being inadequate given a deteriorating market.
The board was overhauled later in 2012, but that was almost a year after the UBS report. Meanwhile, the Government was still touting a possible float of the mining company midway through 2012, when Treasury was warning it may be insolvent if the situation deteriorated, which it did.
Opposition MPs, led by Labour's SOE spokesman Clayton Cosgrove, say there was ample warning that should have caused ministers to force the company to change its strategy immediately or face sacking.
Don Elder's still being paid? Why?
Yes, and the length of his tenure gets longer and longer. Earlier this month it emerged he was still collecting his $1.3 million salary and would continue to until the end of April. This week it emerged he would be paid until the end of August, because of contractual entitlements.
How will this affect the asset sales programme? Is it doomed?
It is clear that Solid Energy itself will not be sold for years, but it is unlikely to make a difference to the wider programme of selling the electricity companies, a sector which has problems of its own, with doubts over the future of the aluminium smelter re-emerging last week.
Banking sources claim Solid Energy's plight underlines why SOEs would benefit from the private-sector pressure a market listing could provide. Analysts would probably have noted the company's strategy and pressed for change earlier.
Why should I care?
Solid Energy employs hundreds of staff and has been one of our largest exporters. Its importance in Southland, Waikato and especially the West Coast is high, as well as in Christchurch, where it has many well-paid staff.
You should also care because you will be paying for this mess, directly and indirectly.
Mr English has said the company will not be allowed to go into receivership, and has not ruled out injecting cash.
How much is unclear. A restructured Solid Energy could manage a smaller debt pile, while Prime Minister John Key has said the banks which lent to the company will "definitely have to wear some of the loss".
But while making Australian-owned banks carry some of the losses will be popular domestically, it is not without consequences.
SOEs generally are able to borrow money at a lower interest rate than similar rivals in the private sector because banks, rightly or wrongly, see this as lending to the government.
While lending to other businesses, such as Kiwibank, might be seen as lower risk than a mining company, lending to an SOE is higher risk once one of them has defaulted on a loan, which is what the Government is asking it to do.
What might happen now?
Opposition MPs on the commerce select committee - which grilled Dr Elder and former Solid Energy chairman John Palmer for two hours - pushed for a full inquiry into Solid Energy's troubles, but the move was blocked by the National Party majority.
Both Labour and the Greens have now written to Auditor-General Lyn Provost urging her to investigate the matter, and her office has confirmed it is being considered.
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