Redundancies loom as Solid Energy faces woes
Job losses are ‘‘inevitable’’ at Solid Energy, which is in ‘‘critical discussions’’ with banks, its chairman says.
Presenting Solid Energy’s annual review to Parliament’s finance and expenditure committee on Wednesday, acting chairman Andy Coupe said the company was ‘‘marginally cash positive’’ but was looking at another significant loss.
For the year to June 30, 2104, the stateowned coalminer posted a loss of $182 million, down from the $335m loss the previous year.
Finance Minister Bill English said this week that the company may not be viable, ruling out cash, loans or guarantees as a bailout.
Solid Energy had not been warned of English’s statements on the company’s future.
Coupe said Solid Energy did not expect further financial assistance from the Government, which has provided two rounds of support, but confirmed the company was in ‘‘critical’’ discussions with banks about debt restructuring.
The $300m debt owed to six banks was ‘‘not sustainable’’ beyond 2016, when they were due to be repaid or refinanced, Coupe said.
Questioned on the possibility of job losses, Coupe said ‘‘reductions are inevitable’’.
He refused to say how many or where the job losses would take place.
The company made 184 employees and contractors at the Stockton mine on the West Coast redundant last July after a restructuring.
It is also looking at selling parts of the business, with North Island operations being the first to potentially face the axe.
South Island mines could follow, with the market ‘‘unlikely to improve for quite some time’’, Coupe said.
Solid Energy audit and risk committee chairwoman Keiran Horne said signing off on the company’s half-year accounts depended on its negotiations with lenders, which were ‘‘wrapped up in the future viability of the company’’.
TSB wrote off its entire $53.9m loan to Solid Energy last month, confirming that talks were under way on negotiating a fresh deal to ensure the company could continue trading.
Days earlier, Solid Energy chairwoman Pip Dunphy resigned after less than a year in the role.
Coupe said Dunphy had personal reasons for doing so.
Solid Energy’s chief financial officer and a senior financial accountant had also resigned.
Labour MP Clayton Cosgrove said Solid Energy was ‘‘the worst [stateowned enterprise] disaster in our history’’.
He said that at the same time Solid Energy was conducting what it called ‘‘critical’’ negotiations with the banks, English had undermined them by saying the Government would not contribute more money.
It was ‘‘pretty grotesque’’ that English had made the statement on the company’s viability without the board’s knowledge.
Hundreds of people had already lost their jobs at Solid Energy, and the Government had effectively cut the rest of the company’s workers loose, Cosgrove said.
English said on Wednesday he was not surprised the company was considering job losses, as it had had several rounds of ‘‘reductions’’ as it attempted to establish its viability.
How far those plans went would depend on some extent to its negotiations with the banks, he said.
‘‘We’ve been aware there’s a plan for further restructuring at the Stockton – and that’s driven as much by the low coal price as by anything else, so that could possibly involve redundancies.’’
There was no indication of the scale of any job losses.
The banks needed to step up to bail Solid Energy out, he said.
EPMU assistant national secretary Ged O’Connell said the Government had pushed the company to the brink with ‘‘constant, unrealistic demands for returns, [and] turning a blind eye to appalling management mishaps and governance failures’’.