Solid Energy has secured a financial restructuring package with the Crown and the company’s commercial lenders, having received majority support from its bank creditors and note holders at meetings held earlier today in Christchurch.
Solid Energy Chairman, Mark Ford, says that the company now has a reasonable chance to trade its way back to a viable and financially stable position over the next three years when the restructured credit facilities come up for review.
“Our commercial lenders and the Crown have given us a lifeline, not a hand out. The business now has to work very hard to complete the turnaround that is required to return to commercial viability. This will be a challenging undertaking given the on-going volatile international coal market and high New Zealand dollar.
“Solid Energy has a good operating future, but it will depend on a gradual improvement in market demand for steel-making coal. We have developed a strong and coherent strategy which, supported by on-going efficiencies and cash generation, will rebuild shareholder value and pay down debt.”
The Financial Restructure package includes:
- The five banks  rescheduling their debts in a syndicated term loan facility maturing on 7 September 2016.
- The five banks and note holder TSB exchanging $75 million of the debt owed by the company for $75 million of equity in the form of non-voting redeemable preference shares.
- The Crown providing a secured working capital loan of $50 million, repayable within three years: a secured mortgage-backed facility of $50 million, repayable within three years, and a secured standby facility of up to $30 million if required.
- The company issuing the Crown a further $25 million in non-voting redeemable preference shares in return for cash.
Control of the company will remain with Shareholding Ministers who own all of the company’s 60.9 million ordinary shares. The refinancing package reduces the company’s drawn bank debt from $300.5 million to $239.3 million and Medium Term Notes from $95 million to $81.2 million.
Solid Energy has refocused its business on its core coal mining capabilities based on three markets:
- a North Island domestic industrial and commercial market to meet demand from New Zealand Steel and Genesis Energy, together with a number of other smaller customers from its Rotowaro Opencast and Huntly East Underground Mines
- the international market for steelmaking coal from customers in India, China and Japan who place a high value on our hard coking coal from our West Coast and Stockton Opencast Mines exported through the Port of Lyttelton
- a South Island domestic industrial and commercial market serviced by our smaller mining operations on the West Coast and by New Vale Mine in Southland.
Over the last year, Solid Energy has shut down non-profitable operations and has embarked on a programme to divest non-core and surplus assets. This includes surplus land throughout the country which will now be sold, with the proceeds contributing to repayment of the $50 million loan from the Crown in the first instance. As of today, Solid Energy employs 889 permanent and fixed term staff, down from 1658 at year end.
1. The five major banks are the ANZ Bank New Zealand; the Bank of New Zealand; Commonwealth Bank of Australia, New Zealand branch; Westpac New Zealand and Bank of Tokyo-Mitsubishi UFJ Ltd, Auckland branch.
For further information contact:
Vicki Blyth Stakeholder Relations Manager
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