The New Zealand government will spend as much as NZ$155 million ($129 million) to restructure state-owned coal miner Solid Energy New Zealand Ltd. after an agreement was reached with lenders.
The costs include a NZ$25 million cash injection, a NZ$50 million working capital loan, a NZ$50 million mortgage and a NZ$30 million standby loan, Finance Minister Bill English said in a statement. They will be included in the government’s financial statement for the year ended June 30.
Solid Energy entered talks with its bankers in February after debt rose and falling world coal prices curbed income. The company has fired workers and closed mines to reduce losses, and the government was forced to abandon a plan to offer as much as 49 percent of it in an initial public offering as part of its asset-sales program.
“Ministers were not prepared to expose taxpayers to on-going losses if Solid Energy’s core business was not considered viable,” English said. “We were prepared to provide support for the company if there was a reasonable chance it could be made viable, and we expected the lenders to also contribute to that recovery.”
The company will issue NZ$75 million in non-voting redeemable preference shares to its key lenders in exchange for part of the debt owed to them, the government said. Solid Energy’s bank debt stood at NZ$286 million at June 30.
Holders of the company’s NZ$95 million medium term notes will be asked to waive some rights to allow the restructure proposal to be put to its bankers.
The government forecasts its program to sell minority stakes in three power companies and Air New Zealand Ltd. will raise about NZ$5 billion, after initially indicating it could get as much as NZ$7 billion when Solid Energy was included.
The statements for the year ended June 30 will be published Oct. 7.
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