Solid Energy admits debt levels led to near-collapse
Solid Energy admits debt levels, not coal, led to near-collapse
Solid Energy has admitted that if it had a debt level appropriate for a major mining company when coal prices fell in 2012 it is ‘most unlikely’ the SOE would be in the perilous state it is now, says Labour’s SOEs spokesperson Clayton Cosgrove.
“Bill English and Tony Ryall have spent months claiming that it was the coal price alone that led to Solid Energy’s near collapse, not their complete mismanagement.
“Today Solid Energy said at select committee that was wrong.
“I asked the company ‘if Solid Energy had a level of debt similar to overseas mining companies when the coal price collapsed in 2012 would Solid Energy be in the same state it is right now?’ The acting chair Pip Dunphy said that would be ‘most unlikely’.
“The truth is National was mining Solid Energy for dividends for years, pushing the SOE’s debt gearing to above 40 per cent by 2012, when the best practice for international mining companies is zero to ten per cent.
“Tony Ryall and Bill English completely mismanaged Solid Energy. Despite numerous warnings of the serious challenges facing the SOE they did nothing but demand Solid Energy run up more debt to pay higher dividends.
“Solid Energy went from an export award-winning company to a basket case under National’s watch. The blame lies at the Government’s door,” says Clayton Cosgrove.