Creditor digs in with legal challenge to Solid Energy plan

Cargill International is owed $27.5 million by Solid Energy. Photo / Greg Bowker

An international conglomerate owed $27.5 million by Solid Energy has issued a High Court challenge to the arrangement which the state-owned mining company's creditors voted through last month.

Cargill International, which owned Spring Creek underground mine in a joint venture with Solid Energy until 2012, said the action was the only way in which its "genuine grievances" would be heard.

Cargill, which has 155,000 employees in 68 countries across different industries, says it has lost US$42.4 million ($63.5 million) in the mine and the amount it is owed is for undelivered volumes of coal from Spring Creek Mining Company.

It says Spring Creek agreed to pay it the $27.5 million as part of a 2012 settlement agreement, with Solid Energy guaranteeing the obligation.

The ailing Solid Energy was placed in voluntary administration in August after concluding it had no real prospect of refinancing $239 million of debt facilities due to mature next year.

Last month, the company's creditors voted through a deed of company arrangement, which will enable a progressive sell-down of Solid Energy's assets over the next two and a half years.

Under the arrangement, trading creditors would be paid in full and obligations owed to others, like banks and bondholders, would be restructured into a two-and-a-half-year facility.

In August it was anticipated that these creditors could get back 35-40c in the dollar.

Cargill said it had been classified as a participant creditor under the arrangement, despite fitting the definition of a trading creditor.

It issued a High Court challenge to the arrangement on Monday.

"We believe it is wholly inappropriate for Cargill to be treated the same as its financiers," said Cargill spokesman Bruce Blakeman.

"The situation we find ourselves in is bitterly disappointing, especially since we have done so much to support the mine and its workers. We hope we can get treated fairly in New Zealand."