Collie Bluewaters gains security over Griffin Coal

Bluewaters Power Station has been granted more formalised step in rights by registering the company under the Personal Properties Securities Act 2009 with a hardening period of six months.

Judge John Vaughan fixed the date of the step in rights to be enforced and backdated from October 1, however if within six months Griffin Coal closes or goes under administration any liquidator, administrator or any unsecured creditor has the ability to challenge the power station's step in rights.

The application was made after it was discovered that Bluewater Power Station's step in rights had not been registered when external administrators, Lanco Resources, took over Griffin Coal and renegotiated an inter-creditor deal in 2013.

Step in rights are considered a security interest under the Personal Properties Securities Act 2009 and need to be registered within 20 days of contract negotiations to be enforced.

According to Bluewaters Power Station director Hiroyuki Fujioka, the company did not receive legal advice at the time that step in rights needed to be registered.

According to the coal agreement between the two companies step in rights would occur in the event that Griffin Coal defaulted under one of the clauses of it's coal supply agreement, including failure to meet coal delivery specifications, failure to deliver coal delivery quantity, an insolvency event or failure to pay a sum due to Bluewaters Power Station.

The court also heard that there was some uncertainty as to the financial position of Griffin Coal as Lanco Resources was also insolvent and subject to receivership in India.

Bluewaters Power Station gave evidence to the court that the last available financial report for Griffin Coal were financial statements to March 2018 and the financial statements to March 2019 were not yet available.

The court also heard that as of 24 April 2019, Griffin Coal had suggested that the mine remained in a "vulnerable financial position with ongoing operational losses."

While Griffin Coal chose not to participate in the proceedings, Judge Vaughan was satisfied that there was cause for step in rights to be appointed however due to registration not occurring within 20 business days of the renegotiated agreement in 2013, a six month "hardening period" was allocated.