Solid Energy delays first-half report, says future coal price weights on debt repayment
Solid Energy, the state-owned coal miner whose chair Pip Dunphy stepped down this week, will delay reporting its first-half accounts, saying forward pricing for coal may impact on its ability to meet debt repayments when they come due next year.
Low coal prices are expected to remain lower for longer than previously forecast and won't recover as quickly, prompting the board to hold back the company's accounts after its monthly meeting today, it said in a statement. Despite a favourable shift in the exchange rate, current and expected coal prices mean Solid Energy will need to keep making structural changes.
"We can see an issue coming. It is not about current performance or any immediate difficulty in meeting our commitments," acting chair Andy Coupe said. "It is about the impact on our balance sheet of future pricing for coal and our consequent diminishing ability to repay or refinance debt when it falls due from September 2016. We are acting early."
A restructuring of Solid Energy was announced in 2013, coinciding with the publication of the annual reports, after collapsing coking coal prices on world markets exposed the company's over-commitment to a range of development initiatives, including development of options to turn lignite coal into diesel and urea, and renewable energy products such as pellets for wood burners.
Last year, Solid Energy received an extension of its $103 million remediation indemnity with the Crown to reimburse the cost of rehabilitation expenses of the company, Pike River (2012) and Spring Creek Mining Co.
The company today said its lenders and shareholder were aware of the company's view.
This week Dunphy stepped down as chair before her term expired in October, having taken over from Mark Ford who fell ill and later died in March of last year.
Last year, the Christchurch-based state-owned enterprise reported a loss of $181.9 million in the 12 months ended June 30, 2014, and the board didn't anticipate a return to profitability until the 2017 financial year. At the time of the annual report's release in October, the company's board forecast a gradual improvement in coal prices with a budget of NZ$153 per tonne in 2015.