FALLEN coal tycoon Ric Stowe’s audacious bid to reclaim his coal empire goes to the state’s Mining Warden’s Court tomorrow.
In an update to creditors last Thursday, Griffin Energy Group (GEG) administrators KordaMentha reported that an entity associated with Stowe, Genbow Pty Ltd, has sought forfeiture of over 20 Griffin tenements.
“This matter has the propensity to raise concerns as to security of coal supply to Griffin Power,” said Korda Mentha.
The administrator believes the court and Minister for Mines and Petroleum have a number of options other than forfeiture of the tenements and will consider the State’s interest when reviewing the matter.
“We understand that Devereaux (or parties associated with Devereaux Holdings Pty Ltd) have also raised concerns with the Department of Mines and Petroleum in respect of the past mining practices of Griffin.”
The action began in March when Mr Stowe, via backers, established the West Australian holding company, Genbow Pty Ltd, to engineer his fight back.
Genbow lodged documents in the Warden’s Court asking for exploration and mining rights for land containing huge coal reserves that are part of Lanco’s expansion plans.
Mr Stowe claims Lanco has not spent enough money on exploring and developing the tenements as required under state laws and therefore should forfeit the mineral rights, allowing him to expand domestic production, as opposed to Lanco’s export plans.
A Griffin spo0kesman said today (Thursday): “The attempt by Genbow Pty Ltd to obtain forfeiture of Griffin Coal's coal mining leases affects many of the tenements that are the subject of current and past operations.
“Griffin Coal firmly believes that Genbow's applications will be defeated and has taken steps to bring the matter to a speedy resolution.”
The court hearing is something of a distraction from the main issue.
Observers believe it will fail as Cazaly Resources’ unsuccessful tilt against mining giant Rio Tinto failed in 2005.
KordaMentha said it continued to work with Sumitomo/Kansai, as the most likely acquirers of Griffin Power, to resolve the coal supply dispute.
Trading difficulties over the past 12 months have so hurt Griffin Power’s cash flows that Korda Mentha no longer anticipates being able to comply with the sale purchase agreement (SPA).
“We are in discussions with Sumitomo/Kansai as to how these requirements can be satisfied given the passage of time since the SPA was initially negotiated.”
Significant resources have been committed to securing State Government approval to restructure Griffin Power and resolve the coal supply dispute.
Key issues between Sumitomo/Kansai, Griffin/Lanco and Lanco’s financiers for the restructure of the contractual arrangements for the supply of coal have been concluded, the update said.
Draft documents are being considered by the State Solicitor on behalf of the Minister for Mines and Petroleum.
The sale process has also been complicated by the recent introduction of the Clean Energy Act 2011.
Other issue include Bluewaters and Bluewaters II operator Transfield Worley Parsons’ (TPWS) exposure to carbon liabilities
TWPS wants an urgent revision to exclude any risk of it being liable for the carbon tax. They assert that without these amendments, the agreement will be frustrated.
Mr Stowe’s company has lodged a cross-claim for recovery of tax losses transferred by Griffin to Devereaux, totalling $61.4 million plus interest.
The administrators have declared a third dividend to GEG creditors of 13 cents in the dollar, paid on July 26. Further dividends will depend on the completion of the sale of Griffin Power.
