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Solid Energy begins asset sale

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World Coal,

New Zealand coal miner, Solid Energy, is moving ahead with its programme to sell all coal mining and other assets over the next 12 months, the company, which entered into voluntary administration earlier this year, said in a press release. The state-owned mining company has retained Goldman Sachs to provide investment banking support. The investment bank has now met with creditors and is working with Solid Energy to prepare marketing materials in support of the sales programme.

The company has already been contacted by interested parties – both in New Zealand and internationally – and has asked Goldman Sachs to begin negotiations with those who have expressed an interest.

Solid Energy was placed into voluntary administration in August as falls in the price of hard coking coal more than offset its cost-cutting and operational efficiency efforts, making its continued operation “unsustainable”, said Andy Croupe, Acting Chairman of Solid Energy, at the time.

As part of the administration process, it said it expected to appoint an investment bank to undertake the sale of its assets over 2 and a half years – a timeline that now seems to have been shortened. Assets that were deemed unsalable, would be closed – a fate that recently befell the Huntly East mine in Waikato with the loss of 66 jobs.

“The company does not need the mine’s production to meet our current or expected customer demand and, because there is no prospect the mine can be run profitability, we have determined it has no chance whatsoever of attracting a buyer. We therefore must act to stem these losses,” said Dan Clifford, Solid Energy’s CEO.

The New Zealand voluntary administration process similar to Chapter 11 Bankruptcy in the US. It is designed to “maximize the chances of the company or its business continuing in existence or, if that is not possible, for the company or its business to be administered with a better return to creditors and shareholders than from immediate liquidation,” according to NMZNZ Ltd, a New Zealand accountancy and business services.

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