THE Bank of Tokyo could lose all the money it has lent Solid Energy if it succeeds in stopping the proposed restructuring of the state-owned coal mining company, New Zealand Finance Minister Bill English says.
“If they go along with the deal they could get all their money back,” he told reporters on Tuesday.
“If they succeed, then Solid Energy would probably go into liquidation.”
Solid Energy faces financial ruin because it owes banks nearly $NZ370 million ($A329.23 million), probably more than it is worth.
The government brokered a debt restructuring deal with five banks – ANZ, BNZ, Westpac, TSB and the Commonwealth Bank of Australia – but the Bank of Tokyo, the sixth lender, doesn’t want to be part of it.
It lodged papers in the High Court in Auckland on Friday and, Mr English says, is trying to stop the restructuring process.
He says it was always known that the Bank of Tokyo didn’t want to be part of the deal.
“The chances of the Bank of Tokyo stopping it are very small,” he said.
“The (reconstruction) process compels them to be part of the agreement, and they’re trying to prevent that.”
The Bank of Tokyo is listed as the second largest lender and is owed $NZ80.1m. The BNZ is owed slightly more than that.
But the combined Australasian banks comprise 78.26 per cent of the $NZ369.7m in lending that is covered by the restructuring deal.
The agreement requires 75 per cent support, and the Bank of Tokyo is bound by that even if it doesn’t want to be part of it.
The legal action it has initiated is an attempt to stop the process.
Mr English says that won’t happen.
“The process is continuing, there’s no intention of renegotiating the arrangements,” he said.
Under the deal, the banks will write off $NZ75m by agreeing to swap debt for shares.
In exchange, the government will buy shares worth $NZ25m and offer Solid Energy secured credit up to $NZ130m.
If the company collapses, about 1,000 staff will lose their jobs.