Solid Energy says it is solvent, but only just, and will need a new deal from its bankers to survive.
It expects no further financial support from the Government, the state-owned coal miner's acting chairman, Andy Coupe, told Parliament's commerce select committee yesterday.
He said the company was not in breach of its banking covenants "but it does have only marginally positive equity".
"On an ebitdaf basis the business is marginally cash positive and we forecast we will maintain that position through to the end of the financial year, June 30, 2015," Coupe said.
But as its balance sheet was structured now it was increasingly unlikely Solid Energy would be able to agree on refinancing of its current banking arrangement, which ran to September 2016, he said.
Discussions with the banks are continuing.
Solid Energy's problem is the collapse in international prices for the coking coal it mines at Stockton on the West Coast and exports.
The mines supplying thermal coal to domestic markets in the North and South Islands were profitable but subject to competitive pressure from imports, chief executive Dan Clifford told the MPs.
Coupe said that while the company had made considerable progress in reducing operational and head office costs - by 30 per cent in the past 18 months - and the weaker exchange rate had helped, those gains had been negated by the continuing decline of the international coking coal price.
A year ago Solid Energy told the committee the break-even price it needed was in the US$140 to US$150 a tonne range. That was already lower than the US$160 prevailing in 2013, when the company was substantially recapitalised.
Since then measures to reduce costs and cut production of "negative margin" coal had lowered that to US$120 to US$130 a tonne, Coupe said.
But the international spot price is now US$103 and prospects of a recovery seem years away.
Green MP Gareth Hughes asked if it was the banks (collectively owed $322 million at the June 2014 balance date) that would decide if the company lived or died.
"They are the dominant stakeholders of Solid Energy," Coupe said.
Labour MP Clayton Cosgrove asked which were its most palatable assets, should it come to a sale.
"The most palatable would be the North Island domestic business," Coupe said. "Then the South Island domestic business. The South Island export business would be the most difficult to sell."
Sketching the international trading environment, Clifford said India was growing, China slowing and Japan showing steady but marginal improvement.
Among supplying countries, Australia and Russia, and to some extent New Zealand, had benefited from foreign exchange changes.
Companies' responses to the falling prices had been mixed, with some cutting production and shedding assets but others increasing output to reduce unit costs. There had been big improvements in cost performance.
For Solid Energy's export business, it came down to maximising production at positive margins, while reducing volumes.
"And it's quite difficult to reduce your cost per tonne while reducing your volumes because of fixed costs," Clifford said.
Hughes also asked who would bear the costs of land rehabilitation if the company went belly up.
The Government has provided Solid Energy with a $103 million indemnity for its rehabilitation liabilities. That is on top of $130 million of working capital facilities and $25 million in preference shares since 2013. Finance Minister Bill English has been very clear there is no more to come.