Administrators Support Board’s Proposal for Deed of Company
Solid Energy Administrators Support Board’s Proposal to Adopt a Deed of Company Arrangement
The Administrators of Solid Energy New Zealand Limited and its subsidiaries have issued their report to the Solid Energy Group’s 1500 creditors today.
The report, which provides a high-level analysis of the company’s position and considers the final version of the Solid Energy Board’s proposal, supports the Solid Energy Group entering into a Deed of Company Arrangement (DOCA) with its creditors.
As advised at the start of the Voluntary Administration process, there were two real outcomes for Solid Energy:
1. Deed of Company Arrangement executed with the aim of allowing an orderly realisation of the Solid Energy Group’s assets
The Administrators are required to issue a report to creditors 5 working days before the Watershed Meeting, analysing the options and producing an opinion for creditors. This enables them to make a fully informed decision – whether or not to vote for the DOCA – when they vote on the future of the company on 17 September.
“We have been working with the Solid Energy Board and management to ensure the best possible outcome for all creditors via the voluntary administration process,” said the Administrator, Brendon Gibson of KordaMentha.
“The DOCA is in our opinion the preferred option. It enables a progressive sell-down of the assets over the next two and a half years. In our opinion, on balance the DOCA provides the best return for all creditors.”
The key results of the Administrators’ analysis are:
An estimate that the return to all creditors will be 15 – 20 cents in the dollar for liquidation.
If the DOCA is supported, trade creditors and employees will receive 100 cents in the dollar. Rehabilitation costs will be covered by the Crown subject to a cap minimising the risk to Councils. Other creditors, including the Bank group and Bondholders, are expected to receive 35 – 40 cents in the dollar.
Mr Gibson said the key reasons for the material difference in return are the forecast improved return from an orderly realisation of the assets and the decrease in liability claims from parties as a result of DOCA negotiations.
“We are advised, subject to finalisation of some minor matters, that the Banks and TSB as the largest Note Holder have agreed to support the proposal which is encouraging for the vote on 17 September,” said Mr Gibson.
Solid Energy Acting Chairman, Andy Coupe, said he was delighted but not surprised that the Administrators supported the DOCA. He said that Solid Energy management and the Board had been working tirelessly to further its proposal. “We are pleased at the support we have received in negotiating our proposal.”
Mr Coupe said the company would be ensuring employees fully understood the detail of the report.
Sent from Solid Energy New Zealand Limited (Administrators Appointed)
Administrators’ report to