WELLINGTON, Aug 13 (Reuters) - New Zealand’s debt-laden state-owned coal mining company Solid Energy Ltd was put into administration on Thursday to ward off its creditors as it looks to organise a sale of assets.
The government refused to pump in any more money to support the company, which has been crippled by a slump in prices and demand, amassing a mountain of debt.
“It is no secret that Solid Energy has faced significant financial hurdles - both from the falling international coal price and its debt burden,” Finance Minister Bill English said in a statement.
“Despite taxpayer support to date, these factors mean the company in its current state is not financially viable.”
The company owes close to NZ$500 million ($330 million) to banks and trade creditors, who will be asked to agree to a freeze of some of the debt so the company can trade on while it sells assets or winds down business over the next 2-1/2 years.
English said the government could not agree with banks on a feasible way to support the company and that administration was the best remaining option to protect staff and creditors.
He said the New Zealand government had put more than NZ$250 million into Solid Energy, which it was unlikely to recover.
Solid Energy produces about 4 million tonnes of coal from mines largely based on the west coast of the South Island and the central North Island.
About half the coal was exported, mainly to India, Japan and China. Much of it was coking coal used in steel making.
English said the company had been battered by a slump in global prices which had fallen to $85 a tonne from $320 a tonne four years ago.
Over the past two years the company, which at one stage was slated for privatisation, has shut down uneconomic mines, discontinued non-mining businesses and axed hundreds of jobs in an attempt to stay afloat.
$1 = 1.5115 New Zealand dollars Reporting by Gyles Beckford; Editing by Joseph Radford
Our Standards: The Thomson Reuters Trust Principles.