Administrators back Solid Energy asset sale

We have been working with the Solid Energy Board and management to ensure the best possible outcome for all creditors via the voluntary administration process

A full independent report of Solid Energy’s assets has been unveiled to creditors, supporting plans to sell down the company’s assets over the next few years.

The beleaguered state-owned enterprise went into voluntary administration in August, and administrators delivered a full report to the company’s 1500 creditors on Thursday.

The report, which contains an analysis of Solid Energy’s position, supported Solid Energy entering a Deed of Company Arrangement (DOCA) with its creditors.

Solid Energy went into a fiveweek voluntary administration with two "real outcomes" possible – the Deed of Company Arrangement, or liquidation, administrator Brendon Gibson said.

The administrators were required to issue a report to creditors five working days before a watershed meeting on September 17, where creditors will vote on Solid Energy’s future.

"We have been working with the Solid Energy Board and man- agement to ensure the best possible outcome for all creditors via the voluntary administration process," Gibson said.

"The DOCA is in our opinion the preferred option. It enables a progressive sell-down of the assets over the next two and a half years."

The DOCA would provide the best return for all creditors, he said.

The report estimated that creditors would receive only 15 to 20 cents in the dollar if Solid Energy went into liquidation, while trade creditors and employees would receive 100 cents in the dollar if the DOCA was supported.

Rehabilitation costs would be covered by the Crown, while other creditors, including the bank group and bondholders, were expected to receive 35 to 40 cents in the dollar.

"We are advised, subject to finalisation of some minor matters, that the banks and TSB as the largest Note Holder have agreed to support the proposal which is encouraging for the vote on 17 September," Gibson said.

Solid Energy acting chairman Andy Coupe said he was delighted the administrators supported the DOCA, although he was not surprised.

The company’s management and board had worked tirelessly to further its proposal, and would ensure employees understood the details of the report, he said.

"We are pleased at the support we have received in negotiating our proposal."

West Coast-Tasman MP Damien O’Connor said many people from around the South Island commuted to the West Coast to work for Solid Energy.

Others had committed their lives and mortgages to a long term future with solid energy on "unrealistic projections" on the value of coal they got from the Government.

Workers on the West Coast and other locals were pleased to hear the company had avoided liquidation. They were hopeful its Stockton mine, north of Westport, would survive with private ownership.

They were wary of the "death knell" the mine’s closure would bring to the area.

Solid Energy’s fortunes fell alongside coal prices in recent years, but critics blamed mismanagement as much as market forces for its predicament.

Four months ago, it cut 172 jobs at Stockton mine, leaving 290 jobs left.