Taxpayers face bailing out state-owned coalminer Solid Energy, which is on the brink of failure putting 1200 jobs in jeopardy.
Finance Minister Bill English cannot say if the company, once a jewel in the crown of the Government's asset sales programme, is now worth anything.
In a shock announcement Mr English and State-Owned Enterprises Minister Tony Ryall said the company was in distress and in discussions with its banks.
But they would not let it fail.
"No, we are not going to let it go into receivership," Mr English said.
Staff would now face two or three months of "unavoidable uncertainty" before they would know their fate.
Meanwhile, employees and suppliers would be paid.
Problems first came to light when the company was put under the microscope by officials preparing it for partial sale.
But Mr English said he had no reason to think ministers had been deliberately misled.
Chairman Mark Ford was not available to comment, but in a statement said the situation had continued to deteriorate despite measures to cut costs and restructure last year.
That saw 450 staff, a quarter of its workforce, lose their jobs. The Spring Creek Mine on the West Coast was mothballed and Huntly East was scaled back
Mr Ford said there had been a big fall in coal prices since 2011. The company was carrying substantial debt and the half-year result would be a significant loss.
Debt has blown out from $300m in June to $389m.
Mr Ford, who took over the chairmanship in November, said Solid Energy was now talking to its bankers and Treasury about the debt and equity support needed.
Mr English said the best advice was that there was a viable core business in the company.
"Who contributes to its recovery is a matter that will be discussed over the next month or so between the company, the banks and Treasury."
He could not rule out a Government bailout and would not rule out its value, put at $2.8 billion by Solid Energy and $1.55b by the Government's advisers in 2011, now being zero.
The Government replaced most of the board in November and long-serving chief executive Don Elder resigned his $1.1m job two weeks ago.
Asked if Dr Elder received a golden handshake, Mr English said he had been paid his contractual entitlements but referred queries to the company.
A spokeswoman said providing specific details would be a breach of a confidentiality deal agreed with Dr Elder and would also breach the obligation to protect his privacy.
But the company has disclosed performance-related bonuses of more than $23.5m over the past two years to 950 employees.
Dr Elder's voice-mail message yesterday said he was out of cellphone range until February 20; he did not return calls.
In recent weeks Solid Energy has sold its bio-energy business to management and put 920 hectares of Southland farmland on the block.
Labour's state-owned enterprises spokesman, Clayton Cosgrove, said National's "epic mismanagement" had turned it from an export-award-winning company into a basket-case.
"Solid Energy appears on the verge of collapse. This must be the first time any government has overseen such a massive failure in a state-owned asset . . . The big loser? Yet again, the taxpayer."
Mr English said one state-owned company, map-maker Terralink, had been put in receivership in 2001.
Solid Energy bought Pike River Coal last year.
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