Debt-laden West Australian coal supplier Griffin Coal will not be bought out by the state government and will probably not continue as a going concern under existing management, the WA government says.
Griffin Coal, WA’s oldest and second largest coal supplier, was placed in administration on Monday after missing deadlines for the payment of debt instalments and tax liabilities.
It has total debts of about $700 million.
After meeting with administrators KordaMentha on Monday, WA Energy Minister Peter Collier said a proposal to either sell Griffin Coal or restructure its debt was ‘‘in confidence’’.
But when asked by reporters whether it was unlikely Griffin Coal would continue as a going concern under existing management, he said yes, suggesting the assets could be sold.
‘‘The financial interests of Griffin rests with the administrator,’’ Mr Collier said.
He said the government’s key focus was Griffin Coal’s 500 employees and it would guarantee the workers’ entitlements.
The matter was not a cause for concern in terms of the state’s future energy supply, he said.
‘‘It’s not an ideal situation.
‘‘In terms of supply, we don’t have too many problems.
‘‘We have more than sufficient capacity to keep the lights on.’’
Griffin Coal’s assets include the Muja open cut mine, which is one of the largest in the world and has been in operation for 56 years, and an associated power station near Collie in the state’s southwest.
The company produces more than five million tonnes of coal annually, most of which is used for domestic power generation.
It is understood the power stations have not been placed in administration but this could occur.
Griffin Coal has $US475 million ($A528.5 million) worth of unsecured debt to US bondholders and missed a December 31 deadline for a $25 million payment.
It has also missed a deadline for a $5 million payment to the Australian Tax Office, the first instalment as part of $25 million settlement reached last year.
The original tax claim was about $200 million and there is speculation the settlement could be declared invalid due to the payment default.
AAP
