Frequently Asked Questions

Which companies are in voluntary administration?

  • Solid Energy New Zealand Limited (Administrators Appointed) (329045)
  • Solid Energy Renewable Fuels Limited (Administrators Appointed) (1357087)
  • Spring Creek Mine Holdings Limited (Administrators Appointed) (1893621)
  • Spring Creek Mining Company (Administrators Appointed) (1897738)
  • Solid Energy Land Holdings Limited (Administrators Appointed) (1915887)
  • Biodiesel New Zealand Limited (Administrators Appointed) (1927762)
  • Pike River (2012) Limited (Administrators Appointed) (1605686)
  • Coal New Zealand Limited (Administrators Appointed) (618061)
  • Coal New Zealand International Limited (Administrators Appointed) (662950)
  • Coal Bed Methane Limited (Administrators Appointed) (1566830)
  • Terrace Coal Mine Limited (Administrators Appointed) (153073)
  • Solid Energy Briquettes Limited (Administrators Appointed) (4135725)
  • Stockton Alliance Limited (Administrators Appointed) (2287804)
  • CoalCorp Services Limited (formerly CoalCorp Insurance Services Limited) (Administrators Appointed) (292841)

 

What is voluntary administration?

Voluntary administration is intended to be a relatively short-term measure that freezes the company’s financial position while the Administrator and the creditors determine the company’s future.  In a VA, an independent and suitably qualified person (an Administrator) takes full control of the company to try to work out a way to save either the company or its business.

If it is not possible to save a company or its business, the aim is to administer the affairs of the company in a way that results in a better return to creditors than they would have received if the company had instead been placed straight into liquidation.

Voluntary administration allows the creditors to determine the future of the company. If creditors approve that the company should continue to trade in some form, that approval is recorded in a deed of company arrangement (DOCA).

In this case, the Board has already tabled a proposal that it believes has the necessary support to be successful.

         

Outline of the Solid Energy voluntary administration process:

Note: timeframes can be extended by order of the Court

 

What happens at the first creditors’ meeting?

The first creditors’ meeting is held within eight (8) working days of the appointment of Administrators.  Creditors can elect a creditors’ committee to represent their interests and can also vote to replace the current Administrator.

What happens at the second “watershed” creditors’ meeting?

The watershed meeting is held within twenty-five (25) working days of the appointment of Administrators.  Creditors are asked to vote to decide the future of the companies in VA.

What information will the Adminstrators’ report contain?

The Administrators’ report will contain details of the business, property, affairs and financial circumstances of the companies, and their recommendations regarding the proposals for the future of the company.  This report is provided to creditors in advance of the watershed meeting so they have adequate time to form a view on how they may wish to vote.

What is contained in the Board’s proposal?

The full text of the Solid Energy Board’s proposal can be found here

The proposal’s key terms are that:

  • Solid Energy will engage an investment bank and undertake an orderly, managed sale of its assets over the next two-and-a-half years.
  • The existing Board will continue to manage Solid Energy, and be monitored by and reporting to the Deed Administrators and a monitoring committee of certain creditors.
  • Solid Energy’s debt as at the date of the VA will be divided into categories and paid as indicated below:
    • Trade debt (day-to-day debts which the Companies incurred in the ordinary course of operations prior to the commencement of the VA) is paid promptly once the proposal has been adopted.
    • Accrued employee entitlements that were outstanding at the date of commencement of the VA (e.g. holiday pay) are paid as per normal.
    • Participant creditors’ debt is restructured into a two-and-a-half year facility. This gives Solid Energy time to carry out an orderly and managed sale of assets, without the pressure of having to make significant debt repayments. Participant creditors include, amongst others, Solid Energy’s banks and medium term noteholders.
  • All costs incurred in the normal course of ongoing trading are paid when they fall due and rank ahead of all other debt – this means trade creditors can continue to trade with the Companies with confidence of payment.
  • Existing Crown indemnities for site rehabilitation costs are restructured to provide certainty for affected local authorities and assist the asset sale process.
  • Participant creditors get what’s left at the end, after payment of all trade creditors and employees, as settlement of their debt. If the proceeds are less than the outstanding debt, the participant creditors release the shortfall.
  • If any assets cannot reasonably be sold they will be put into a safe and secure state, all employee entitlements will be fully met, and the asset will be closed.
  • The end result of the proposal, if adopted by creditors at the watershed meeting, is that:
    • All trade creditors will be paid in full, whether incurred before the VA or in future;
    • All employee entitlements, including redundancy (if any) will be paid in full, whether incurred before the VA or in future;
    • The assets of the Companies, including non-mining and mining assets, will be put up for sale over the next two and a half years with the goal of continuing operations under a new owner and ongoing employment for as many employees as possible;
    • With the support of the Crown, local authorities will have certainty regarding mine rehabilitation costs in their areas;
    • If any assets cannot reasonably be sold they will be put into a safe and secure state, all employee entitlements will be fully met, and the asset will be closed.
    • The Banks and other financing creditors support the process such that, if the assets of the Companies are not enough to pay off the full amount owing to them, they will release the shortfall;
    • The Companies will be wound up on a solvent basis, once all assets have been disposed of or closed down.

What is a deed of company arrangement (DOCA)?

A DOCA is a binding arrangement 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.   The Solid Energy Board of Directors has already put up a proposal to be considered for incorporation into a DOCA.

Will a DOCA be adopted?

The Board proposal will be put to a vote of creditors at the watershed meeting. If the proposal receives support from more than 50% of a Company’s creditors by number, and more than 75% of its creditors by value, it will be adopted as a DOCA. The Board believe the proposal already has the necessary support to be successful.

I need to speak to the Administrators. Who should I call?

If you are an existing customer, supplier or employee, please speak with your usual contact person in the first instance.  They should be able to help with your query. If necessary, you can contact the Administrators at KordaMentha on or via email at

 

Employees

Are jobs safe at my site or operation?

  1. During the five-week voluntary administration period, no jobs will be disestablished or reinstated i.e. existing redundancies currently serving out notice will not be reinstated.
  2. If the Board’s proposal is accepted, the business will continue trading while the asset sales process takes place. ‘Business as usual’ will resume, including regular assessment of each site and operation’s viability.
  3. If the Board’s proposal is accepted and an asset is sold, employees will either transfer to the new owner on substantially similar terms and conditions or, if their services are not required by the new owner, will be made redundant on the basis of their existing entitlements.
  4. If during the two-and-a-half year sales period an operation or asset is unable to be sold, it will be put into into a safe and secure state, all employee entitlements will be fully met, and the asset will be closed.

Will outstanding employee pay be frozen as well?

No. Payroll will be seamless and your employment terms don’t change.


Customers

What does the voluntary administration mean for customers?

For the five-week period of the Administration, it should be seamless.  Customers will deal with the same people, receive the same product and be billed as they have in the past.  If the Board proposal is adopted at the watershed meeting, supply will continue without interruption.

Will customers continue to receive coal?

Yes – to all intents and purposes from a customer point of view, it is business as usual.

 

Suppliers

We are owed money in respect of supplies to XXXXX company. Is this going to be paid? When?

All expenses incurred during the voluntary administration, will be paid when they fall due.

However, the company’s debts as at the administration date are frozen.  The payment of those debts will be considered as part of the proposal that will be put to creditors, including suppliers, at the watershed meeting in five weeks.  If the Board proposal is adopted and a DOCA is put in place, all trade creditors will be paid promptly.

 

Community

What does this voluntary administration mean for our mine?

It has been well known that Solid Energy has faced significant challenges. The Board proposal is aimed at securing the long-term future of the mine in a stable and secure entity, with a controlled transition. If that can be achieved, jobs will be more secure than they have been.