Solid Energy New Zealand Ltd., the government-owned coal miner whose shares may be offered for sale in the next five years, is seeking support from its bankers as debt rises and its income shrinks.
“We are in discussions with our banks and Treasury on the debt and equity support required for future operations of the business,” Chairman Mark Ford said in a statement. “The company is carrying substantial debt and the half-year result will record a significant loss.”
Prime Minister John Key expects to raise at least NZ$5 billion ($4.2 billion) over the next three to four years by selling as much as 49 percent stakes in Solid Energy and other power companies, and by reducing the government’s stake in Air New Zealand Ltd. Earlier this week he told reporters Solid Energy may not be ready for sale in the near term.
“The position of the state-owned enterprise has continued to deteriorate despite the restructuring that has already taken place,” Finance Minister Bill English said in an e-mailed statement. “World coal prices have dropped significantly, which has contributed to the deteriorating financial position.”
Global coal prices fell as low as $140 a metric ton in September from $224 in June, the company said. It has closed mines and fired workers to reduce costs, and is working on a plan to provide a sustainable business, Ford said.
More restructuring may be required, State-Owned Enterprises Minister Tony Ryall said in English’s statement, without providing details, adding that the company’s debt stands at NZ$389 million and it’s making losses.
Solid Energy reported a NZ$40.9 million loss in the year ended June 30, including a NZ$110 million asset write-down. Chief Executive Officer Don Elder resigned earlier this month.