4 Aug 2015

Solid Energy in 'precarious position'

6:02 am on 4 August 2015

Prime Minister John Key says state-owned coal miner Solid Energy is in a precarious position and a decision on its future could be made in the coming weeks.

Digger loads up a truck at Stockton Coal Mine.

A digger loads up a truck at Solid Energy's Stockton Coal Mine (file) Photo: 123RF

The company has told staff it has three options - a financial arrangement allowing it to stay afloat, a controlled sell-down or liquidation.

Solid Energy is struggling to service about $320 million of debt.

John Key said the Government had made it clear to the banks that they needed to sort the situation out.

John Key.

Prime Minister John Key Photo: RNZ / Alexander Robertson

"It's in a precarious position, quite a bit of work is happening behind the scenes to see what the next step in the process is," he said.

"Obviously we're very conscious of a number of important stakeholders - firstly those that work for Solid Energy, then you've got the creditors, of which there are quite a number of companies, and then finally you've got the interest of the banks."

Mr Key said the banks controlled the process and it was up to them to decide what happened, but he said the Government and the board were working with the banks on what the next steps might be.

Mr Key was not ruling out liquidation but said it was the Government's least preferred option.

"There's a range of other potential options that sit there and it's question of what can be achieved, but it's at a very delicate stage at the moment."

Labour MP Clayton Cosgrove.

Clayton Cosgrove Photo: Supplied

Labour state-owned enterprises spokesperson Clayton Cosgrove said the Government must take responsibility for Solid Energy's decline.

He said it should have intervened years ago and ensured the company had a 'Plan B'.

"The Government simply uses the commodity price and the markets drying up as a alibi, well they're a fact, that was a contributor - but what you don't do is you don't sit there with your arms folded, inactive, you actually react to market forces and consolidate your position, which is what every other coal company did around the world except Solid Energy."

More than just a business transaction - EPMU

Engineering, Printing and Manufacturing Union (EPMU) assistant national secretary Ged O'Connell said it was important to see the situation with Solid Energy as more than just a business transaction.

"The first thing is it's about New Zealand communities, long-term communities in Waikato, West Coast and Southland.

"Secondly, there's a strategic interest in terms of our energy supplies over the next 30 to 40 years. You know, we don't need to have valuable and strategic energy supplies in the hands of some non-caring multi-national."

Mr O'Connell said Solid Energy's demise was no ordinary business failure.

"This was a massive failure by a chairman and a chief executive who were just left to quite frankly, go mad, with government resources.

"I think the Government has got an obligation to the communities in New Zealand and I'm sure New Zealanders would see it as a smart investment, rather than some of the other things that we talk about, so I do think that John Key has got some responsibility."

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