Solid Energy in debt crisis talks
The depth of Solid Energy's financial woes have been laid bare with the Government confirming the company is in talks with bankers over its debt levels.
The Solid Energy board was working with Treasury, advisors and the banks about further restructuring options, with the aim of returning the company to a sustainable financial position, Finance Minister Bill English said.
"Despite restructuring, Solid Energy's financial position has continued to deteriorate. It is in constructive discussion with banks," English told a media briefing this afternoon.
He confirmed there had been differences of opinion for some time over the direction of the company, whose chief executive resigned earlier this month.
"There will be the opportunity for us to go back and look pretty hard at the governance and the monitoring."
The Government would not let the company go into receivership, English said.
He would not directly answer questions about a taxpayer-funded bailout, but would not rule it out.
"Our best advice is there is an ongoing viable business there."
However, it was yet to be seen whether the company was worth anything. The company had not missed any repayments to his knowledge.
He would not rule out more mine closures.
Coal prices had declined and the company's alternative activities had not performed as expected.
The problems became clear when the company was placed under "close scrutiny" as preparations for mixed ownership model.
State-owned Enterprises Minister Tony Ryall said a number of factors had weighed against the company, in particular world coal prices dropping by 40 per cent.
"It is facing very serious financial challenges," Ryall said.
Ryall declined to say whether Don Elder received a payout on his departure as chief executive on February 4.
Solid Energy's debt stands at $389 million and its interim result, which is due shortly, will show additional losses.
Earlier this week Prime Minister John Key said it was very unlikely Solid Energy would be sold in the near future.
The state-owned coal miner bought Pike River Coal last year, after the company went into receivership following an explosion that killed 29 workers in 2010.