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

 

Gordon Campbell: On Bank Scandals (And Air Crashes)

Last month, the Australian Securities and Investment Commission (ASIC) filed proceedings against Westpac over activities that have some distinct echoes of the Libor scandal. More>>

Budget: Health Funding Must Keep Up With Need

NZNO: “The nursing team has been doing more with less for years. It’s getting to the point that we’re really worried about our colleagues, our patients, our jobs and the level of health care available for people in our country." More>>

ALSO:

Emissions Inventory: Time For The Government To Do The Right Thing

It’s time for the National Government to step up and do the right thing to reduce climate pollution as data shows New Zealand’s greenhouse gas emissions are higher than ever, the Green Party said today. More>>

ALSO:

Budget 2016: More Partnership Schools To Open

Seven new schools will join the eight Partnership Schools already open, along with further new schools opening in 2017. “The growth of this policy is a reflection of the high level of interest from educators and community leaders,” Mr Seymour says. More>>

ALSO:

No Correspondence With English: Did Brownlee Make Up Sale Of Navy Ships ‘On The Hoof?’

Having revealed that several Royal New Zealand Navy vessels have not left port in years, New Zealand First is now asking the Minister of Defence to prove he did not come up with the idea of selling HMNZS Taupo and Pukaki until the media asked him. More>>

Housing Plans: Labour- Abolish Auckland Urban Boundary
The Government should rule out any possibility of an urban growth boundary in Auckland Council’s Unitary Plan if it is serious about fixing the housing crisis. More>>
Greens - State House Solution
The Homes Not Cars policy allows Housing New Zealand to retain its dividend and, in addition, would refund its tax, to spend on the emergency building of around 450 new state houses. More>>

ALSO:

Houses And Taxes: Post-Cabinet, Pre-Budget Press Conference

The Prime Minister said that the pre-budget announcements showed that his Government is “investing in a growing economy”. He re-affirmed the National Government’s commitment to lowering personal tax rates but that any such change must fit with the fiscal reality of the time. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news