The board of struggling coal mining company Solid Energy has announced it has placed the struggling company and all of its associated companies in voluntary administration.
The state-owned company held meetings with its 400 staff around the country this morning before making the public announcement on its fate just before noon today.
KordaMentha partners, Brendon Gibson and Grant Graham have been appointed as the administrators.
Solid Energy acting chairman Andy Coupe said the company had faced very challenging conditions.
"In the face of dramatic declines in the price of hard coking coal, the company made significant gains in cost-reduction and operating efficiencies but the market has continued to fall and there was still no near-term prospect of any significant recovery," he said.
Among the board's proposal were steps including the sale of all assets over the next two-and-a-half years and keeping the existing board to manage the company.
At the start of the month, Solid Energy told staff there were three options for it going forward: an arrangement that would allow it to continue operating, some kind of controlled sell-down, or liquidation.
Finance Minister Bill English and State Owned Enterprises minister Todd McClay released a statement after the announcement was made, saying it was no secret the business was in trouble.
"Despite taxpayer support to date, these factors mean the company in its current state is not financially viable," Mr English said.
Solid has been crippled by debts of about $320 million and in May cut 113 jobs at its Stockton mine.
It's also been badly hit by falling international coal prices and in April the government ruled out putting more money into Solid Energy after bailing out the company in 2013 and 2014.
WHAT'S VOLUNTARY ADMINISTRATION?
* Administration is a stop-gap measure in which a struggling company freezes its assets while an independent manager (administrator) works out whether it can keep operating.
* They then set in place a plan to save the company if they think it's possible.
* If the company cannot be saved, the administrator creates a plan to get the best outcome for creditors from the current position.
WHAT DOES IT MEAN FOR EMPLOYEES?
* No jobs will be disestablished or reinstated during the temporary voluntary administration period - ie existing redundancies will not be reinstated but no new ones will be undertaken.
* If the board's proposal to creditors is accepted, bussiness will continue as usual as assets are slowly sold off.
* The viability of each site (workplace) would be regularly re-assessed.
* When an asset (workplace) was sold, employees would either transfer to the new owner on similar terms and conditions, or if the new owner doesn't need them, they will be made redundant according to their existing contract conditions.
* If an asset (workplace) can not be sold within two and a half years, it will be closed and employee entitlements like redundancy will be paid redundancy according to their contracts.
