Pike River Coal Mining Company Unlikely to Repay Loans, Appoints Receivers

Pike River Coal Co., owner of a New Zealand coal mine where 29 miners died after blasts last month, had receivers appointed after telling major creditors it’s unlikely to be able to repay loans.

Managers from PriceWaterhouseCoopers were appointed by New Zealand Oil & Gas Ltd., which holds about 30 percent of the company’s shares and is one of the largest secured creditors, at the request of the Pike board, Chairman John Dow said in a statement. Pike River shares have been suspended since Nov. 22 after the first explosion at its mine on the west coast of the nation’s South Island.

“The company finds itself in a precarious position financially,” Dow said in the statement.

The first blast at Wellington, New Zealand-based Pike River’s mine occurred on Nov. 19, followed by a larger explosion on Nov. 24 that prompted police to say no one would have survived. Rescue teams have so far been unable to enter the mine, part of which is burning underground. The incident is the country’s worst mining disaster in 96 years.

“It will be an extended period before any resumption of mining can be contemplated, and with Pike River rapidly facing insolvency, receivership is an unavoidable step,” David Salisbury, New Zealand Oil & Gas chief executive officer, said in the statement.

New Zealand Oil shares fell 2 cents to 87 New Zealand cents at 12:45 p.m. in Wellington. Pike River last traded at 88 New Zealand cents on Nov. 19, giving it a market value of NZ$356.7 million ($266.5 million).

Uncertain Future

The board has advised the receivers that its priorities are to recover the bodies of the dead men and make the mine safe, to cooperate with all inquiries into the cause of the disaster, and to ensure employees get their entitlements, Dow said.

The board also wants to preserve the value of the asset “while recognizing there is considerable uncertainty about the future of the mine,” he said. “Both Pike and New Zealand Oil are supportive of any intentions to eventually reopen the mine.”

New Zealand Oil said the Pike board had confirmed its debts are substantial and in excess of its cash and other immediately foreseeable sources of funds, the Wellington-based company said in a separate statement.

To contact the reporters on this story: Tracy Withers in Wellington at twithers@bloomberg.net. Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.