Adam Bennett at NZ Herald reports:
The Government has loaned stricken state owned coal miner Solid Energy $100 million and extended a further $30 million standby facility as part of a restructuring package announced this morning.
Finance Minister Bill English and Minister for State Owned Enterprises Tony Ryall said the package had been agreed between the company, the Government and key lenders.
“As we have said previously, ministers were not prepared to expose taxpayers to on-going losses if Solid Energy’s core business was not considered viable,” English said.
“However, we also said that we were prepared to provide support for the company if there was a reasonable chance it could be made viable, and we expected the lenders to also contribute to that recovery,” he says.
This is a good outcome for the 1,000 or so staff of Solid Energy. However it is risking a further $100 million of taxpayer money. Hopefully the loan will be repaid in time, as Solid Energy adjusts to the new environment.
This for me reinforces why absolutely the Government should not own competitive commercial companies like Solid Energy. Taxpayers should not have to be exposed to the risks involved with such investments.
Chairman Mark Ford said the proposal “would allow the refocused coal mining business to trade its way back to profitability over the next few years, but that this would have to be supported by ongoing efficiencies and cash generation and improvements in the international coal market”.
“We believe that the company has a good operating future and we hope that with the continued support of our shareholder and our funders, we can re-establish the company as a major employer and economic contributor in our key coal mining regions.
The moment it is stable again, we should sell it – and not just 49% of it. If we had sold it three years ago, the taxpayer would be hundreds of millions of dollars better off.