Announcement
GENERAL: NZO: Insurance settlement for Pike River Coal Limited
11:55am
NZO
12/09/2011 11:55
GENERAL
REL: 1155 HRS New Zealand Oil and Gas Limited
GENERAL: NZO: Insurance settlement for Pike River Coal Limited
NZOG (New Zealand Oil & Gas Limited) has been advised by the Receivers for
Pike River Coal Ltd (In Receivership) (PRCL) that a conditional agreement
has been reached with PRCL's insurers in respect of material damage and
business interruption insurance claims associated with the tragic events of
19 November 2010. While all of the parties have reached an in principle
agreement to the terms of the settlement, the settlement remains subject to
execution of formal documentation by NZOG, BNZ and the owners of the leased
mining equipment who have priority rights.
The Receivers and NZOG have agreed that some of the insurance settlement
should be directed to PRCL's unsecured creditors, including contractors and
former employees, through an early payment plan.
At the time of the events in November 2010, PRCL held extensive insurance
with a cap of $100m. PRCL's Receivers have advised today that they have
agreed with the insurers to a payment of NZ$80m in full and final settlement
of claims under those insurance policies. The Receivers expect to receive the
settlement proceeds around the end of September this year.
Approximately $6.3m will be paid to the owners of leased mining equipment
arising from their priority rights, leaving approximately $73.7m to put
towards PRCL's debts.
The Bank of New Zealand is a first ranking secured creditor owed
approximately $23.2m and will be paid in full.
As the other first ranking secured creditor, NZOG has legal priority to all
of the remaining monies. However, Chief Executive David Salisbury says NZOG
recognises the huge and ongoing impact the tragic events have had on the West
Coast community.
"Hopefully all of PRCL's creditors can receive full payment when the sale of
the mine occurs. However, for the mine workers, contractors and suppliers
this has been a very stressful time, emotionally and financially. We
therefore support the Receivers using some of the insurance payout to make a
voluntary early payment now to all unsecured creditors."
The details of the early payment arrangements have been determined by the
Receivers and are supported by NZOG.
Under the proposal, unsecured creditors will receive a payment of the first
$10,000 of their claim (or their full claim if less than $10,000) and up to
20c in the dollar for any balance above that amount, up to a capped aggregate
amount of $10.5m. Unsecured creditors are not being asked to reduce their
total claim and will still be entitled to claim for the full remaining
balance, once the Receivers complete the sales process. Unsecured creditors
will be asked to agree to a moratorium on certain actions they could
otherwise contemplate, including seeking the appointment of a liquidator.
This will support the Receivers' sales process in the interests of all PRCL's
creditors and investors. As the total amount available for early payment to
unsecured creditors under the proposal is limited, the amount to be paid to
each creditor may need to be reduced if actual claims accepted are greater
than the amounts of claims known to date.
Under Section 229 of the Companies Act 1993, a Notice of Meeting is being
sent to all creditors and they will be asked to submit postal votes on the
early payment plan, which if accepted by a majority in number representing at
least 75% in value of each class of creditors, will be binding on all
creditors. NZOG understands that details of the early payment plan will be
mailed to creditors within the next week.
If the early payment plan is approved, the unsecured creditors (including
NZOG and the owners of leased mining equipment) will receive payments. On
the basis of known creditor claims to date, around 243 creditors will be paid
in full and 222 creditors will receive a part-payment.
NZOG will receive $3.0m as part-payment of its total unsecured debt of
$15.1m. The remaining sum from the insurance settlement will pay off
approximately $38.3m of the $53.0m in secured debt held by NZOG. This will
reduce NZOG's remaining debt to $14.7m secured and $12.1m unsecured. NZOG
also has a 29.4% shareholding in PRCL.
David Salisbury says as a secured creditor, NZOG has sought to have a
constructive influence since the tragedy occurred.
"Following the mine explosion on 19 November last year, NZOG loaned PRCL
$12m. After the Receivers were appointed it was this funding that allowed the
Receivers to carry out their duties - to support the mine stabilisation
efforts, pay employees their statutory entitlements, co-operate with the
various inquiries, begin a sales process and pursue the insurance claims."
"Now, by supporting the early payment plan for unsecured creditors, NZOG is
again acknowledging the widespread impact this tragedy has had, and that the
support of the local community is crucial if the sales process is to realise
the full value of the assets and the mine is to be safely reopened."
David Salisbury says the agreement reached in settlement of the principal
insurance claims is a good outcome.
"The insurance settlement ticks off one of the primary tasks of the
Receivers. The sales process is also well advanced, with the Receivers having
advised us that a number of interested parties are conducting due diligence
ahead of making final offers."
"The mine stabilisation efforts have always been given priority and NZOG
understands that the Receivers are working with an Expert Panel to advance a
plan to allow a safe reclamation of the access tunnel, which is a necessary
precursor to any move to re-enter the mine or to attempt a body recovery
exercise."
"A very complex set of tasks are having to be managed and while we all would
hope for quick resolutions we believe the Receivers are doing their job with
great empathy and skill."
Key Points:
- An $80m conditional settlement has been agreed between PRCL's insurers and
the Receivers.
- Approximately $6.3m will be paid to the owners of leased mining equipment
on a first priority basis.
- The BNZ, as a secured creditor, will receive approximately $23.2m in full
settlement.
- NZOG, as the other secured creditor, has agreed that the Receivers should
offer an early payment to PRCL's unsecured creditors.
- Under the proposal, unsecured creditors will receive a total of
approximately $10.1m in early part-payment.
- NZOG will receive approximately $38.3m as a secured creditor and $3.0m as
an unsecured creditor.
- NZOG will still be owed approximately $14.7m in secured debt and $12.1m in
unsecured debt.
- The mine sales process is ongoing and NZOG expects to recover its remaining
secured debt and possibly some or all of its remaining unsecured debt through
that sales process.
- The Receivers are continuing with the mine stabilisation and tunnel
reclamation activities.
ENDS
End CA:00213615 For:NZO Type:GENERAL Time:2011-09-12 11:55:17
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