Hon Bill English

Minister of Finance

Hon Tony Ryall

Minister for State Owned Enterprises

1 October 2013

Media Statement

Financial restructure of Solid Energy proposed

A proposal to financially restructure Solid Energy has been agreed between the Crown, the company and key lenders, Finance Minister Bill English and Minister for State Owned Enterprises Tony Ryall say.

“As we have said previously, ministers were not prepared to expose taxpayers to on-going losses if Solid Energy’s core business was not considered viable,” Mr English says.

“However, we also said that we were prepared to provide support for the company if there was a reasonable chance it could be made viable, and we expected the lenders to also contribute to that recovery,” he says.

Mr Ryall says that although the company still has a lot of work to do, and market conditions remain challenging, the point has now been reached where a financial restructuring proposal can be formalised with Solid Energy’s key lenders.

“The proposed restructuring will give the company more time to work through the issues it faces, as it continues to focus on its core coal business,” Mr Ryall says.

The proposal includes:

• ·         A restructuring of the bulk of the company’s bank facilities.
• ·         The company issuing $100 million in non-voting redeemable preference shares – $75 million to key lenders in exchange for part of the debt owed to them, and $25 million to the Crown in exchange for cash.
• ·         A secured working capital loan of $50 million provided by the Crown, repayable within three years.
• ·         A secured land mortgage of $50 million provided by the Crown, repayable within three years.

Ministers have also agreed to a secured standby facility of up to $30 million, provided by the Crown, if required.

“Holders of the company’s medium term notes are being asked to agree to waive some of their rights to enable the company to put the financial restructuring proposal forward to lenders,” Mr Ryall says.

“The process to formally adopt the proposal is now underway and is expected to be complete by the end of the month.”

Mr English says the Government’s financial statements for the year to June 30 2013, to be issued next Monday, will include the financial impact of the proposed agreement, including the $25 million cash injection and $100 million of loan facilities and the $30 million standby facility.

“After many months of complex discussions between the Crown, the company and its key lenders we welcome this next step to move the company forward,” Mr English says. 

ENDS

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