New Zealand state-owned coal miner, Solid Energy (SENZ), has been placed into voluntary administration by its board of directors, a process that allows the company to continue trading while creditors consider the best way forward.
The company has faced very challenging conditions in recent months, as large declines in the price of hard coking coal has more than offset progress made in cost reduction and operating efficiencies.
“As a result, it is no longer sustainable for the business to trade under its current capital structure,” said Andy Croupe, Acting Chairman of Solid Energy.
“We have been upfront with our employees and other stakeholders about the challenges facing Solid Energy. For some months we have been consulting with our banks and shareholder to develop a suitable plan. As a result, the board has structured a proposal for creditors that, if adopted, would result in operations continuing under a Deed of Company Arrangement (DOCA),” continued Croupe. “In the board’s view, that is far preferable to an immediate liquidation,”
Under the board’s proposal, SENZ would engage an investment bank to undertake the sale of its assets over the next two and a half years. If an asset cannot be closed, it would be closed.
A DOCA is a binding agreement between a company and its creditors governing how the company’s affairs will be dealt with if the business is to continue in some form. In order to be adopted, it requires support from 50% of the creditors by number and 75% by value.
A first meeting of creditors – over 1500 in total, who will be entitled to vote on the proposal – will be held within eight days. A second meeting, including the vote on the board’s proposal, will be held within 25 days.
“It is important to note that during the voluntary administration period, it will be business as usual for SENZ and its associated companies,” said Brendon Gibson, a partner at KordaMentha and one of the appointed administrators. “This will include a continued strong focus on health and safety, environmental, community and commercial matters throughout our engagement.”
Written by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/mining/13082015/the-end-of-the-road-for-solid-energy-2726/