Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Nats milked troubled Solid Energy for cash

David

SHEARER

Labour Leader
13 March 2013 MEDIA STATEMENT

Nats milked troubled Solid Energy for cash

Ministers pressured Solid Energy to increase its debt levels so it could return bigger dividends to the Government despite knowing the company was facing financial difficulties, says Labour Leader David Shearer.

“Bill English knew that coal prices were forecast to decline in 2009 but still urged Solid Energy to increase its gearing (debt to equity) ratio. That means ‘go out and borrow more’ despite knowing there was trouble ahead.

“The Finance Minister told Parliament today he didn’t know coal prices were going to decline. But documents obtained by Labour show that he did.

“In May 2009, shareholding ministers, including Bill English, wrote to Solid Energy expressing disappointment with the ‘forecast decline’ in its financial performance and ‘dramatic decline in profitability and dividends’.

“In it, they urge Solid Energy to increase its gearing ratio despite confirming that they’re aware there has been a ‘significant decline’ in forecast coal prices.

“At the same time, the Government was demanding increased dividends. And Solid Energy paid up, returning $130 million over four years, including $30 million in late 2011 by which time coal prices had further declined and the company was in financial distress.

“The company’s total borrowing ballooned from $13 million in 2009 to $191 million the following year and $313 million by 2012.

“John Key and his ministers are desperately dumping the blame on the Solid Energy board. But the real blame rests with them. They were urging the company to borrow more despite knowing stormy financial times were ahead. They knew the company was in trouble but continued to treat it like a cash cow.

“It’s time John Key took responsibility. While Solid Energy’s woes are complex and this is not the only factor in its decline, the pressure from ministers to borrow more and pay bigger dividends certainly contributed to its current dire financial straits,” said David Shearer.

ENDS

NOTE: Letter from shareholding ministers to Solid Energy attached
Letter_from_Ministers_to_Solid_Energy_May_2009.pdf

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

2040 Target And Lower Standards: “Swimmable” Rivers Five Times More Likely To Make You Sick

Forest & Bird has condemned the government’s new water quality standards, warning New Zealanders that they lock in current levels of water pollution and allow for a 5-fold increase in the chance of getting sick from swimming in a river.

“Despite an explicit assurance from Minister Smith that the new water standards would provide for human and ecosystem health, he has failed to deliver on either of these things,” says Forest & Bird CEO Kevin Hague. More>>

 
 

Immigration: Clampdown On Rogue Employers Good First Step

The Human Trafficking Research Coalition is pleased at the new clampdown on rouge employers who exploit migrants announced by Minister Woodhouse this morning, and believes this is a step in the right direction. More>>

ALSO:

Mayor: 750 New Social And Affordable Homes For Wellington (Over A Decade)

The next stage of Wellington’s Housing Upgrade Programme will see at least 750 new units of social and affordable housing built over the next decade, Mayor Justin Lester has announced. More>>

ALSO:

22/2: Christchurch Quake Memorial Unveiled

A city, a region, a nation and an international community impacted by the Canterbury Earthquakes will come together to mark the sixth anniversary of the deadly quake and dedicate Oi Manawa Canterbury Earthquake National Memorial. More>>

ALSO:


November Quakes:

Gordon Campbell: On The Mana-Maori Party Deal

If the self-interest involved wasn’t so blatant, the electorate deal between the Maori Party and Hone Harawira would be kind of poignant. It’s a bit like seeing the remaining members of Guns’n’Roses or the Eagles back on the road touring the nostalgia circuit… playing all the old hits of Maori unity and kaupapa Maori politics. More>>

ALSO:

Private Provision: First Social Bond To Focus On Mental Health

New Zealand’s first social bond will help around 1700 people with mental illness into work, Finance Minister Steven Joyce and Social Investment Minister Amy Adams say. More>>

ALSO:

Immigration: Short Reprieve For Nine Indian Students

A temporary hold on deportations of nine Indian students is a step in the right direction but the Government urgently needs to implement safeguards to stop further injustices to more international students, the Green Party says. More>>

EARLIER:


Megaupload Case: High Court Rules Dotcom, Co-Accused Eligible For Extradion

Internet entrepreneur Kim Dotcom and his three co-accused are eligible for extradition to the United States, New Zealand's High Court ruled... Justice Murray Gilbert upheld a decision by the District Court that there were grounds for Dotcom, Mathias Ortmann, Bram van der Kolk and Finn Batato to be extradited. More>>

ALSO:

PREVIOUSLY:

Port Hills Fire: Midday Update, Monday 20 February

• 9 homes destroyed
• 2 homes with partial damage. Damage includes things like cracked windows, heat damage.
• 3 properties with damage to other external structures e.g sheds or outbuildings More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news