Solid Energy sell-off gets Govt support
Selling off Solid Energy's assets is a lot better than liquidating the company, the Government says.
Solid Energy's administrator is backing its board's plan to sell off the assets of the troubled state coal miner over the next few years.
The state-owned enterprise entered voluntary administration last month under a $320 million debt cloud.
The report by KordaMentha's Brendon Gibson and Grant Graham says the deed of company arrangement with creditors is the best option.
"In our opinion, on balance the DOCA provides the best return for all creditors," said Mr Gibson.
State-owned Enterprises Minister Todd McClay says under the proposal, trade creditors will be paid in full and staff will have better job certainty.
"This is a much more positive recommendation than the alternative, liquidation, and is likely to offer the best outcome for staff and creditors," he said.
Under the deed of company arrangement, the business will continue trading while assets are sold over two-and-a-half years.
Any assets not sold will be closed and returned to the Crown, while no jobs will go during the administration process.
The company has 540 employees and around 200 contractors.
The administrators' analysis of the company estimated that creditors would only get 15-20 cents in the dollar if it went into liquidation.
If the deed was backed, they said, trade creditors and employees will get everything they are owed, while other creditors, including banks and bondholders, are expected to receive 35-40 cents in the dollar.
Mr Gibson said they had been advised that the banks and TSB, the largest note holder, have agreed to support the proposal, subject to the finalisation of a few issues.
Solid Energy's acting chairman Andy Coupe said he was delighted but not surprised that the board's proposal had been backed by the administrators.
A watershed meeting, where the company's 1500 creditors will vote on the future of the 14 companies in administration, will be held next week.
They could vote to agree to a board proposal to operate under administration, place the company in liquidation or exit administration and revert the control of company to the board.
Late last month the creditors of the company, including BNZ, ASB, ANZ, Westpac and Bank of Tokyo, held their first meeting in Christchurch.