Pike River Coal Ltd in receivership

7:42 am on 14 December 2010

The company at the centre of the West Coast mining tragedy where 29 men died has been placed in receivership.

Pike River Coal Ltd says it has substantial debts and is rapidly approaching insolvency in the aftermath of the 19 November disaster near Greymouth.

Major creditor and shareholder New Zealand Oil and Gas said on Monday that the Pike River Coal board had requested the company go into receivership.

Pike River Coal says its debts are in excess of its cash and other sources of funds.

It owes New Zealand Oil and Gas $64 million and the BNZ about $23 million.

PricewaterhouseCoopers has been appointed as the receiver and three staff are already in Greymouth.

Some 180 people were employed by Pike River Coal before the disaster and the company spent $13 million on wages last year.

The company announced on Friday that a major chunk of its workforce would be made redundant and it would meet with staff this week.

Cruel blow for workers, says union

The union representing Pike River Coal workers says news the company has been placed in receivership is a cruel blow for the miners before Christmas.

Garth Elliott, of the Engineering, Printing and Manufacturing Union, says workers had earlier been told they would be paid until mid-January and receive redundancy and other entitlements.

Mr Elliott says all of that is now uncertain and the union is seeking talks with the receivers to clarify the situation.

On Monday, receivers met with the families of the men who died and will meet with staff on Tuesday. Receiver John Fisk says pay and entitlements are being worked out.

Receivership unavoidable - NZOG

New Zealand Oil and Gas says it is evident it will be an extended time before mining can resume at the site and receivership was unavoidable.

Chief executive David Salisbury says decisions on the mine's future must wait at least for the end of recovery efforts. However, the company does support an intention to eventually reopen the mine.

The company's most valuable asset is its coal, which is worth about $4 billion at current prices, but it remains off limits while the mine remains closed.

The company is unable to assess damage to the millions of dollars worth of equipment and infrastructure it had below ground. The coal processing plant and equipment outside the mine was not damaged in the explosions.

New Zealand Oil and Gas on Monday requested that its shares be placed on a trading halt, pending an announcement.

Afterwards, shares were down 2 cents at 87c. Shares in New Zealand Oil and Gas previously traded at 89c on Friday.

Trading in Pike River Coal shares has been halted since the disaster. The company last traded at 88c.