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NZO
26/01/2012 16:23
GENERAL
REL: 1623 HRS New Zealand Oil and Gas Limited
GENERAL: NZO: PRCL impairment
NZOG (New Zealand Oil & Gas Ltd) advises that it expects to impair all of its
remaining investment in Pike River Coal Ltd (in Receivership) (PRCL) in its
half year accounts.
NZOG's financial statements for the six months ended 31 December 2011 will be
released on 22 February.
During the six month period, NZOG received a total of $41m from the PRCL
insurance settlement. NZOG also advanced $4.6m under a short term loan
agreement to the Receivers to fund both the ongoing mine stabilisation
efforts and the sales process.
PRCL unsecured debt has previously been fully impaired while the secured debt
has been carried in NZOG's accounts at full value. No value is assigned to
NZOG's shareholding in PRCL.
As part of preparing its half year accounts, NZOG has undertaken a further
review of the carrying value of its investments in PRCL. This has required an
assessment of the expected future cash recovery from PRCL and the ongoing
cost of the receivership, which NZOG is funding.
The Receivers for PRCL have advised that there are now three potential
outcomes from the sales process they are undertaking - an outright purchase
of the mine; a structured deal with a smaller upfront payment and future
payments dependent on certain outcomes being achieved; and sale of the
removable assets only.
The first two scenarios are both expected by NZOG to be conditional, with the
structured option including milestone payments and a possible re-opening
success payment. Achievement of these milestones, undertaken by a purchaser
and conditional on the actions of various third parties, adds considerable
uncertainty in trying to predict the timing and degree of any further return
to NZOG.
Given the highly conditional nature of any further receipts and uncertainty
regarding timing, the NZOG Board expects to impair all of the remaining
secured PRCL debt.
The accounting impact of this will be a net increase of just under $21m
between 30 June 2011 and 31 December 2011 in NZOG's impairment provision.
End CA:00218898 For:NZO Type:GENERAL Time:2012-01-26 16:23:13
