John Palmer's last act as Solid Energy's chairman was to announce the bad news: the state-owned enterprise had posted a $40.2 million net loss for the 2011-12 financial year on the back of major asset writedowns.
He said the company was reviewing the future of its Spring Creek mine on the West Coast. It was looking to reduce underground coal-mining operations and exit renewable energy production.
But Palmer did not announce all the bad news when he fronted the announcement in late August 2012.
Inquiries disclose the Solid Energy board that Palmer presided over had in fact already taken a decision to immediately close the Spring Creek mine which was haemorrhaging too much cash.
The Treasury, at the Government's behest, wanted to review the operation first.
John Key admitted the differing views when I talked with him in San Paulo last week as he continued to heap more fuel on the Solid Energy bonfire.
Back in August, he said that from the Government's point of view it would be good to see the mine stay operational and he was pleased the company was taking time to consider its future while staff were suspended.
The problem is that during the two-month delay between when Palmer's board wanted to close the mine and when his succcessor Mark Ford announced the inevitable, the company's exposure to the loss-making asset continued to snowball.
Estimates suggest the exposure was growing at $8 million a month. Arguably the waiting period imposed on the Solid Energy board by its Government shareholder caused it to rack up another $15 million of debt.
Neither the Government nor the Treasury will see it this way. Key's drivers were probably political.
The upshot of Spring Creek's final move into "care and maintenance" was the slashing of the workforce from 254 to about 20 - adding to the pressures on the tightknit West Coast community which had already taken a collective gut punch from the Pike River coal mine explosion.
Key may well have been genuine. But the two-month waiting time while Spring Creek was reviewed also provided valuable political softening-up space.
In late September, Ford said the mine had not been profitable for some time and had lost $100 million since the Spring Creek Mining Company, a joint venture with international industrial giant Cargill, was set up in 2007.
It had been in a $50 million development phase with a limited amount of coal being extracted and between $40 million and $70 million was needed to return it to full production.
"The mine has performed below expectations as a result of more complex geology being encountered, higher costs and slower development progress," Ford said.
Palmer and former chief executive Don Elder would have said exactly that if the previous board had been allowed to act on its own resolution. But the shareholder knew best.
This blurring of the lines between the Government as shareholder and the SOE board it insists was totally responsible for all decisions affecting Solid Energy's balance sheet raises important questions.
Unfortunately, when Palmer and Elder fronted up to a parliamentary select committee last week to answer MPs' questions, they were repeatedly cut off at the pass by Labour's Clayton Cosgrove, who, in his haste to try to blame the company's predicament on an edict from National's former shareholding minister Simon Power for SOEs to increase their gearing levels, stopped the duo from getting their explanations heard.
If Cosgrove had been less anxious to score a political point (and keener on more forensic questioning of Palmer and Elder) he could have probed the sorry debt saga to pinpoint just how much of the $389 million debt that Solid Energy has racked up in recent years was due to funding a $125 million coal processing plant at Stockton on its balance sheet.
This was topped up by a further $150 million for new equipment.
The joint-venture at Spring Creek didn't help. Cargill was apparently unwilling to invest in the wake of the global financial crisis. In any event it would have been good money after bad.
There are suggestions that Elder earlier recommended closing Spring Creek altogether. What Elder said at the select committee was that the mine was opened as a compromise between the then joint venture partners. But the mine was in the wrong place and under the wrong conditions with the wrong mine plan.
"That set the future for Spring Creek for the next 13 years and does today."
It is obvious that Solid Energy has been in breach of its banking covenants for months. Key and Finance Minister Bill English have endeavoured to monster the company's banks into assisting in a debt restructure.
The banks are in a tight corner. They don't want to put the company into receivership, but around the traps they are letting it be known they do not believe the Government or the new board have been sufficiently transparent.
The problem is the Government in its haste to distance itself from the fallout may well have trashed the value of assets that could be sold to defray debt, as indeed would occur if the banks imposed a receivership. It is a delicate situation.
Last year Elder was in talks with Chinese SOEs over the Southland lignite field. He reiterated the essential value proposition the lignite field represents in his discussion with the select committee.
This presents the Government with a conundrum. Does it allow the company to sell the asset on or beat the bankers up into taking more of the restructuring burden than is palatable?
Ironically, English admitted on TVNZ's Q+A last weekend that "cash flow numbers are a bit more positive than we might have expected" - hardly surprising when Ford himself told the committee the company was at break-even at an operational level.
Signs that rational heads might at last be starting to prevail were obvious with English's conciliatory approach on Q+A where he adopted, with alacrity, the "perfect storm" mantra that Palmer and Elder had used at the select committee.
Palmer and Elder have admitted their blame for this fiasco. Best the Government gets on with it and does not erode shareholder value further by political point-scoring when the game is over.By Fran O'Sullivan Email Fran