Update regarding the sale of the Pike River Coal Mine

Thursday 10 May 2012

News Release

Update regarding the sale of the Pike River Coal Mine

PwC Partners John Fisk, David Bridgman and Malcolm Hollis, Receivers of Pike River Coal Limited (In Receivership) today announced Solid Energy New Zealand Limited has completed its due diligence and has signed a sale and purchase agreement for the Pike River Coal Mine.

Mr Fisk says, “We, the Receivers, are pleased with the sale and purchase agreement signed today, as we consider it is the best way forward for all parties.”

Settlement is now expected to take place in July, or later depending on the granting of various ministerial consents, other approvals and documentation giving effect to the agreement relating to possible body recovery between Solid Energy and the Crown set out in a letter entered into between them today.

“We will continue to maintain the mine in a safe and stable condition whilst assisting Solid Energy to work through the conditions of the sale,” concludes Mr Fisk.
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Q&A fact sheet text:
Q&As sheet
Complementary to the Receivers’ news release
“Update regarding the sale of Pike River Coal mine” (dated 10 May 2012)
Q What is the current position with the sale of the mine to Solid Energy?
A Today, PwC Partners John Fisk, David Bridgman and Malcolm Hollis, Receivers of Pike River Coal Limited (In Receivership) have executed a detailed Sale and Purchase Agreement with Pike River Mine (2012) Limited, a wholly-owned subsidiary of Solid Energy New Zealand Limited.

The agreement is still conditional on a number of matters, including the transfer of the mining permit and Department of Conservation’s access agreements.
Q When will the sale be completed?
A Completion will be dependent upon the conditions in the Sale and Purchase Agreement being satisfied. The Receivers expect the settlement to take place in July 2012, or later depending on the granting of various ministerial consents, approvals and documentation giving effect to the agreement relating to possible body recovery between Solid Energy and the Crown set out in a letter entered into between them today. The parties have until 31 January 2013 to resolve these conditions. However, it is hoped the conditions could be satisfied by around July 2012.
Q What is the expected outcome for Pike River Creditors from the sale?
A Solid Energy will pay an initial $7.5 million with up to a further $25 million to be paid depending upon the eventual commercial reopening of the mine and level of coal production. For this reason, it is not currently possible to determine what the final outcome of the receivership will be. Under the Early Payment Plan implemented in September 2011, all Pike River unsecured creditors were repaid the first $10,000 owed to them and thereafter received an additional 20 cents in the dollar. Based on the consideration specified in the sale agreement with Solid Energy, and taking into account all of the factors which the Receivers are currently aware of, they [the Receivers] do not expect there will be funds available for a further distribution to unsecured creditors.
Q What is the role of the Receivers from this point on?
A The Receivers have an obligation under the Sale and Purchase Agreement to ensure the mine remains in a safe and stable condition, and their focus continues to do this whilst assisting Solid Energy to work through the remaining conditions of the sale. With the receivership entering a new phase, matters such as a possible reclamation of the tunnel and any eventual re-entry are for the purchaser [Solid Energy] to consider as part of its plans for the mine. The Receivers, having regard to their duties to the Pike River creditors, are not in a position to progress either of these matters prior to completion of the sale.
Q. As Receivers of Pike River, how do you ensure the body recovery is a priority for SENZ?
A. The Receivers undertook to the Pike River families to secure a continuing commitment to ensure access and recovery of the bodies of the 29 men are not impeded by any sale.
That commitment will be honoured through SENZ providing undertakings to the Crown, including to, in-conjunction with its efforts to commercially mine in the permit area, take all reasonable steps to recover the remains of the 29 men in the Pike River mine, provided that it reasonably considers this can be undertaken safely, is technically feasible, and financially credible.

The details of this arrangement and its implementation are being finalised and documented between SENZ and the Crown, and further requests for comment need to be directed to SENZ.
Q Why do the Receivers believe a sale of the Pike River mine to Solid Energy is the best option?
A The sale offers certainty and enables conclusion of the receivership. Solid Energy is an experienced and credible New Zealand mine owner and operator, with extensive knowledge of underground coal mining on the West Coast. The Receivers also believe the sale to Solid Energy provides the best prospect of eventual body recovery as well as a re-opening of the mine that will deliver general economic benefit to the West Coast.

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