Solid Energy’s shareholding ministers, Finance Minister Bill English and Minister for State Owned Enterprises Tony Ryall confirm the Government has been advised that Solid Energy is in discussions with its banks.
“The Solid Energy board is working with Treasury, advisors and the banks with respect to further restructuring options, with the aim of returning the company to a sustainable financial position,” Mr English says.
“World coal prices have dropped significantly which has contributed to the deteriorating financial position that Solid Energy is in now.
“These discussions are required because the position of the state-owned enterprise has continued to deteriorate despite the restructuring that has already taken place,” Mr English says.
State-owned Enterprises Minister Tony Ryall says a number of factors have weighed against the company, in particular world coal prices dropping by 40%.
“It is facing very serious financial challenges,” Mr Ryall says. Solid Energy’s debt stands at $389 million and its interim result, which is due shortly, will show additional losses.
“The new chair and board are focusing on a return to a core coal business which is viable at current world prices. The public is aware that there had already been restructuring at the company, but more may be required,” says Mr Ryall.
“The Government appreciates this is a very unsettling time for employees and suppliers and the company’s wider stakeholders but it is a process which must be worked through carefully and properly,” the ministers say.
Opponents of government plans to sell a minority shareholding in a few state assets talk about what will be lost.
They don’t talk about what will be gained nor do they talk about the risk that comes with running a business which includes loss of capital.
Why should taxpayers face this risk for something that isn’t core government business?