Solid Energy board putsch takes more scalps
The putsch on the Solid Energy quickened pace this afternoon, with the resignations of long-serving directors John McDonald and Simon Marsters.
They follow two others, former deputy chairman John Fletcher and Michelle Smith. All but McDonald's has been declared at the Companies Office. The former senior Fletcher Challenge executive confirmed to BusinessDesk from his home in Ohope Beach that he had resigned from the Solid Energy board.
That follows the departure of chairman John Palmer, also the chairman of Air New Zealand, whose resignation was signalled ahead of Solid Energy's disclosure of a $40.2 million loss after major capital writedowns and decisions to close non-coal businesses and severely curtail underground coal mining.
The status of the two remaining directors - David Patterson, a Wellington partner in law firm Chapman Tripp, and Australian metallurgist and professional mining company director Alan Broome - is unclear.
Broome has served on the Solid Energy board since 2006 and is director and chairman of Australian mining companies and sector organisations. The Sydney Morning Herald reported in July, under the headline "Broome Swept Out" that Broome was removed as chairman of the Australian coal company Endocoal at shareholders' instigation.
HSBC Custody Nominees, as custodian for clients holding 10.78 per cent of Endocoal, sought a shareholders' meeting to oust Broome, citing concerns he had "failed to oversee the company's budget properly", with Endocoal blowing the $15 million raised from its 2010 initial public offering a year earlier than had been set out in the prospectus.
"In January 2012 a further $12 million was sought through a placement ... and still the company had failed to drill half the tenements,'' the SMH reported. Broome reportedly resigned as chairman of ASX-listed Jatenergy ''as a result of material differences of opinion with a number of the company's largest shareholders" in May.
Deputy chairman Fletcher, resigned with six months still to run on his six year directorship, while Michelle Smith left a year early after serving on the Solid Energy board since November 2010.
The resignations and appointments have yet to be announced publicly by State-Owned Enterprises Minister Tony Ryall, who has released a swag of other state-owned enterprise board appointments this week.
The moves follow the scheduled departure of Solid Energy's long-serving chairman Palmer earlier this year, coinciding with a massive restructuring as the company announced it was facing a $200 million revenue shortfall in the current financial year.
It has moved to cut 25 percent of its workforce, has put the Spring Creek underground coal mine in "care and maintenance", has put expansion of the Huntly East coal mine on hold, and announced writedowns and disposals on several failed initiatives to diversify beyond coal mining into renewable energy and bio-fuels.
Chief executive Don Elder described the deterioration in global coking coal prices as an "extreme" and sudden downturn which caught the company by surprise. However, the meltdown has made government advisers question the previous board's oversight of Elder's numerous initiatives in non-core coal mining activities.
Solid Energy's difficulties have seen it withdrawn as one of the four state-owned energy companies to be partially privatised.
In a statement to BusinessDesk, State-Owned Enterprises Minister Tony Ryall said "a new chair has recently been appointed to Solid Energy and the company is moving into a new phase."
"As has been previously indicated, there would be some changes at Solid Energy, and a number of directors' terms were coming to an end in the next few months."
Auckland's Watercare Services chief executive, Mark Ford, who led the government's Auckland super-city merger, was appointed to replace Palmer.
Sources pointed to basic metrics such as the fact that Solid Energy had produced around 4 million tonnes of coal annually for some years, but that its workforce had expanded from around 400 to nearer 1,500.
Companies Office records also show the appointment of one new director, Neville Sneddon, a Sydney-based mining engineer listed as non-executive chairman of CSM Energy, a specialist firm consulting to mining companies seeking to reduce costs, improve profitability and manage mines over their full life cycle.
Sneddon's career includes senior management of the mines inspectorate in New South Wales, chief operating officer of Shell Coal, later the Australian coal arm of Anglo American, and adviser to state and federal governments on mine safety.