'Small chance' of Solid demise

THE Bank of Tokyo’s High Court challenge to the proposed Solid Energy debt restructuring may backfire because halting it could bring the coal producer down, New Zealand Finance Minister Bill English has warned.
'Small chance' of Solid demise 'Small chance' of Solid demise 'Small chance' of Solid demise 'Small chance' of Solid demise 'Small chance' of Solid demise

Huntly East Mine. Courtesy Solid Energy New Zealand.

Blair Price

"Our advice is they have only a small chance of succeeding," English told The New Zealand Herald.

"The irony is if they do succeed in stopping the transaction, it could bring the company down and they would lose all their money. So everyone here has an incentive for this transaction to get right through to the end.”

The Japanese bank is Solid’s second-biggest lender ($NZ80.1 million) and lodged proceedings in New Zealand’s High Court last week.

The six banking lenders, also including ANZ, Commonwealth Bank of Australia, Westpac and Britain’s TSB, will reportedly meet in Christchurch next week to approve the debt restructuring, which requires 75% support from this consortium.

Under the arrangements, the banks will reportedly write off $75 million of Solid’s outstanding debt in exchange for redeemable preference shares with the NZ government to buy $25 million of them, and to separately provide the state-run coal producer with up to $130 million of secured credit.

Solid has about $369.7 million of debt.