Finding a buyer for the Collie coal operations of Ric Stowe’s Griffin Coal within two weeks was completely unrealistic, administrator Brian McMaster said today.
Finding a buyer for the Collie coal operations of Ric Stowe's Griffin Coal within two weeks was completely unrealistic, administrator Brian McMaster said today.
Five of Mr Stowe's flagship companies were placed in administration owing around $700 million at the weekend, sparking fears Griffin's coal operations may be forced to close, throwing over 500 Collie workers out of a job.
Yesterday, Premier Colin Barnett offered a $4 million "pre-payment" to Griffin for two weeks worth of coal slated for state generator Verve Energy in the hope that it would tide the operation over long enough for a buyer to be found.
But Mr McMaster, from KordaMentha, said hopes for such a speedy resolution were misplaced.
"It's impossible, frankly", he told WA Business News, adding it was likely to take at least three months to come up with "any plan that makes sense".
Furthermore, the Griffin administration process was likely to last at least six months "from whoa to go", he said.
Mr McMaster also confirmed that conditions attached to the government's $4 million offer may result in the administrators seeking alternative sources of interim funding.
Mr McMaster said he had initially sought pre-payment for six weeks worth of coal to ensure continuity of operations, but his request was turned down by the government.
While around 20 Australian and international parties had already expressed interest in Griffin's assets, Mr McMaster said interest so far had mostly been preliminary and did not involve specific proposals.
Wesfarmers, which owns the neighbouring Premier Coal operation at Muja, is understood to be among those to have expressed interest.
Though a merger of Wesfarmers and Griffin's Collie coal mines have been mooted intermittently over the last decade, they have never before been pursued seriously.
Mr McMaster said he expected to pursue two main alternatives for Griffin: a sale process, or a restructuring. Both options would be investigated in parallel before the optimum alternative was identified.
Mr McMaster expressed surprise that Azure Capital chairman John Poynton, who this week raised the potential to consolidate and float the Collie coal operations, had not contacted administrators before flagging the concept publicly.
Mr Poynton today said the concept was simply one possibility and declined to comment on any specific initiatives potentially under investigation.
Mr McMaster confirmed that workers entitlements would rank above the claims of all other creditors in the event they had to be paid out.
While those entitlements currently amount to around $12 million, a fraction of the relative value of Griffin's coal assets, Mr McMaster said closing Griffin's operations would lift the total value of outstanding worker entitlements to more than $50 million.
Construction Forestry Mining and Energy Union WA secretary Garry Wood said the amount included $43 million that would be owed if the workforce was retrenched, reflecting workers' length of service.
"Any sale needs to take that service payment into account ... and we'll be working determinedly to ensure that happens," Mr Wood said.
Interestingly, Mr McMaster revealed that Mr Stowe was the only significant secured creditor to the group through a family company owed around $10 million.
All other creditors, including international bondholders owed over $500 million, were unsecured and ranked equally with all other creditors, he said.
