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Buying interest in Pike River Coal, creditors owed $110.4 million


The assets of Pike River Coal are attracting buying interest as the extent of the mining company's debts become clearer.

Duncan Bridgeman
Tue, 15 Feb 2011

The assets of Pike River Coal are attracting buying interest as the extent of the mining company’s debts become clearer.

Receivers from PricewaterhouseCoopers say they have received unsolicited expressions of interest from various parties in the assets since their appointment on December 13.

“At this stage we will continue to deal with immediate issues, and are still considering the longer term options available with respect to the mine and its related assets,” John Fisk, David Bridgman and Malcolm Hollis said in their first report out today.

Stock piled coal had already been sold to Solid Energy, they said.

According to the first report, creditors claim to be owed a total of $110.4 million, with more than half of that due to major shareholder New Zealand Oil & Gas.

The receivers noted that their primary focus currently was on trying to stabilise the mine and on the handover to the company from the police.

Pike River Coal was placed in receivership in December after its main asset was devastated by a series of deadly explosions, which killed 29 miners.

Several inquiries are underway including a Royal Commission into the disaster.

Secured creditors 
There are three creditors holding general security interests over Pike River’s assets.

These include NZ Oil & Gas (owed $51.2 million), Bank of New Zealand (owed $22.41 million) and Solid Energy ($1.2 million as part of a coal transport agreement).

PWC said the BNZ and a security trustee on behalf of NZOG have priority over Solid Energy.

The securities granted in favour of BNZ and NZOG rank equally and any distribution must be on a pro rata basis, the report noted.

Bleak outlook for unsecured creditors 
So far total unsecured claims of $31.9 million had been received from parties including a $13.2 million short-term loan from NZOG.

Trade creditor claims of $15.4 million have been received.

“At this time, the outcome of the receivership is very uncertain,” PWC said. “Given this uncertainty, our current best assessment is that it is unlikely that any funds will be available to meet the claims of unsecured creditors.”

Shareholders
No estimate was given as to any value the shares of the company might have either now or in the future should they come off suspension.

“At this stage it is too early to ascertain when or whether the suspension of the listings will be lifted or trading in the shares may resume.”

Trading in the shares was suspended on November 19 when the first explosion occurred.

Employees
As at the date of receivership the company had $10.9 million of cash.

All 115 employees made redundant following the receivership have been paid their full preferential entitlements to a maximum of $18,700.

The receivers have retained 28 employees to provide management, technical and administrative services.

PWC is also employing a further 12 staff on a casual basis.

Duncan Bridgeman
Tue, 15 Feb 2011
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Buying interest in Pike River Coal, creditors owed $110.4 million
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