Debt-laden Solid Energy is in voluntary administration with a proposal to sell off its assets over the next two and a-half years, at least staving off any immediate redundancies for its remaining 740 staff.
Crucially, the proposal must be accepted by up to 1500 creditors in a mid-September meeting, or Solid Energy could yet be tipped into an unruly liquidation, with at least $320million of debt outstanding.
Once flying high on the back of record global coal prices, employing nearly 2000 people and earmarked for privatisation, Solid Energy has since been propped up by the Government to the tune of $250million, Finance Minister Bill English said yesterday.
Labour and the Green Party both roundly criticised the Government for lack of action, calling for more effort into regional employment and strategy developments.
After wide-ranging restructuring and redundancies of almost 900 people, from administration and mines at Stockton, Spring Creek and Huntly East, about 540 staff and 200 contractors remain.
Mr English said, ''It is no secret that Solid Energy has faced significant financial hurdles, both from the falling international coal price and its debt burden.
''Despite taxpayer support to date, these factors mean the company in its current state is not financially viable.''
Solid Energy acting chairman Andy Coupe said it was too early to say how much Solid Energy was worth.
Iit was ''unlikely'' that its sale, or sales, would cover its outstanding debt, BusinessDesk reported.
Mr English said entering temporary voluntary administration, and freezing a portion of its debt, provided ''the best chance'' for parts of the business to continue to operate successfully in the future, under new ownership.
He said there was a risk that if creditors did not accept the proposal in mid-September, one could ''pull the plug'' and have Solid Energy placed in liquidation.
If the two and a-half year sale process was accepted, it would be ''business as usual'' for trade creditors, customers and employees, with the latter not facing job redundancies during that period.
Engineering, Printing and Manufacturing Union assistant national secretary Ged O'Connell said although there was still a risk of liquidation, he hoped administration meant more jobs could be saved, and workers' entitlements to compensation and annual leave payments secured.
Once a high-flying SOE tagged to be sold alongside the Government's other energy assets, Solid Energy quickly had the indebtedness former chief executive Don Elder led the company into revealed by the plunging coal price.
Emboldened by record coal prices of more than $US350 ($NZ528) a tonne in 2011, Dr Elder borrowed against coal assets in the ground valued at billions, and spent tens of millions on alternate-coal use research projects.
Coal subsequently slumped from $US350 tonne in early 2011 to $US150 over 18 months, and since January 2013 has further haemorrhaged down to about $US85 this week.
Environmental groups Greenpeace and Coal Action Network Aotearoa condemned Government policy on Solid Energy as ''nothing short of negligent'' and not being responsive to Solid Energy's ''freefall''.
''An economically smart Government would have planned an alternative path forward,'' Greenpeace senior campaigner Simon Boxer said in a statement.
Labour leader Andrew Little said the Government owed it to Westport and the West Coast to put all its efforts into developing a ''rigorous regional development strategy'', to create new jobs and community opportunities.
''The Government encouraged Solid Energy's management to make reckless decisions and risky investments. They ran wild and hundreds of millions of dollars of debt were incurred,'' Mr Little said.
Green Party energy spokesman Gareth Hughes called for the Government to work with the Greens on new economic development and employment strategies for places like the West Coast, transitioning away from coal mining and towards secure and sustainable jobs.
''Six years ago, ministers were warned that Solid Energy was overvalued, carrying too much debt, and was overoptimistic about its future, but the Government didn't listen and instead it demanded more in dividends and higher debt gearing,'' Mr Hughes said.
Mr English said the $250million in taxpayer support included $25million of equity and (unused) options for $130million of loans available to Solid Energy.
