The Government is this afternoon holding a briefing on Solid Energy's worsening financial position.
The Government and the company released statements saying Solid Energy was in discussion with its banks as it struggles with low coal prices.
Solid Energy's shareholding ministers, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall said the company's board was working with Treasury, advisers and the banks about further restructuring options, "with the aim of returning the company to a sustainable financial position."
The company - which was once a candidate for partial sale - has laid off hundreds of workers on the West Coast, Huntly and from its Christchurch head office. There has been a board cleanout and its long-serving chief executive Don Elder announced his departure earlier this month.
"Discussions are required because the position of the state-owned enterprise has continued to deteriorate despite the restructuring that has already taken place," Mr English said.