Solid Energy owes about $300 million to banks including ANZ, the Commonwealth Bank of Australia, BNZ, and Westpac. Pictured: Solid Energy's Rotowaro open cast mine in Huntly. Photo / NZPA
Solid Energy owes about $300 million to banks including ANZ, the Commonwealth Bank of Australia, BNZ, and Westpac. Pictured: Solid Energy's Rotowaro open cast mine in Huntly. Photo / NZPA
Prime Minister John Key has ruled out another Government bail-out for Solid Energy as it faces the prospect of liquidation.
Mr Key described Solid Energy as being in a "precarious position" and said the Government and board of Solid Energy were working with banks to try to sort out the mining company's $300 million of outstanding debt.
The mining company Solid Energy owes about $300 million to banks including ANZ, the Commonwealth Bank of Australia, BNZ, and Westpac.
Mr Key said liquidation was not the preferred choice of the Government because it would result in Solid Energy ceasing trading and its assets sold to repay creditors.
"The least preferred option is liquidation but I can't rule out that at some point in the future that happens.
"It might happen if all the other things fall over. There are other options which would find more favour with the Government but the call is one that would be made by the bankers because it is essentially their debt."
However, he ruled out further Government financial support, including a loan or a guarantee.
Mr Key said the Government had already put money into Solid Energy. "I don't think it is looking to inject more."
He said there were other ways the Government could assist and they were being looked at now.
Solid Energy owes about $300 million to banks including ANZ, the Commonwealth Bank of Australia, BNZ, and Westpac. File image of Solid Energy methane extraction site near Huntly.
On Friday, Solid Energy advised it was considering options of liquidation, a controlled sell-down and trading on.
Yesterday Mr Key said a sell-off of parts of the business was possible, such as the more viable Stockton mine near Westport and Huntly mine.
However, he said he was not aware of an interest from a foreign buyer in the Stockton mine.
Hive News' Bernard Hickey said it would be the first receivership of a large state owned company.
Previous companies to go into receivership included Learning Media and Terra Link, which were both much smaller.
The company was originally among the energy companies tagged for partial privatisation but Finance Minister Bill English took it off the block after its position deteriorated because of the drop in the price in coal and failed efforts to diversify into other ventures.
It has since gone through several restructures, including announcing plans from July to lay off a further 119 staff at the Stockton and Spring Creek mines to save $36 million.
Government has stepped in to help Solid Energy twice already - in October 2013 it put in about $155 million and in September 2014 agreed to a further $103 million to help Solid Energy meet its obligations to remediate old mines.
