“Our commercial lenders and the crown have given us a lifeline, not a hand out,” Solid chairman Mark Ford said.
“The business now has to work very hard to complete the turnaround that is required to return to commercial viability. This will be a challenging undertaking given the ongoing volatile international coal market and high New Zealand dollar.
“Solid Energy has a good operating future, but it will depend on a gradual improvement in market demand for steel-making coal. We have developed a strong and coherent strategy which, supported by on-going efficiencies and cash generation, will rebuild shareholder value and pay down debt.”
Solid said the refinancing package reduced its drawn bank debt from $NZ300.5 million to $239.3 million, a fall of 20.4%, while its medium term notes obligations fell from $95 million to $81.2 million.
The financial restructuring placed the debt owed to the ANZ, Bank of Tokyo, Commonwealth Bank of Australia, Westpac and Britain’s TSB into a syndicated term loan facility that matures in the first week of September, 2016.
The banks also agreed to exchange $75 million of Solid debt for non-voting redeemable preference shares of Solid while the NZ government paid for $25 million worth of these shares in cash.
The NZ government has provided a working capital loan of $50 million and a mortgage-backed facility of $50 million to Solid with both payable in three years. The government further offered a secured standby facility of up to $30 million, if required, under the financial rescue package.
Operational strategy
While Solid has already made cutbacks including placing operations on care and maintenance, the new strategy is to satisfy three key markets.
The first is the North Island’s domestic needs, mainly from New Zealand Steel and Genesis Energy, with the coal to come from the Solid’s Rotowaro opencast and Huntly East underground mines.
The South Island’s domestic market is also targeted with coal from Solid’s smaller West Coast operations and its New Vale mine in Southland.
Lastly, Solid will target the export hard coking coal markets of India, China and Japan with its premium product from the West Coast and Stockton opencast mines.
