08 March 2016
by Mark Ludlow
Clive Palmer sacks administrators, resumes control of Queensland Nickel
An improving nickel price has allowed Clive Palmer to take back operational control of Queensland Nickel, with a fresh $23 million cash injection to keep the ailing refinery open.
While administrators held an urgent meeting with major creditors on Monday afternoon to discuss the Palaszczuk government's $10 million financial lifeline, Mr Palmer moved swiftly to sack FTI Consulting as the managers of the Yabulu refinery and set up a new company to take control.
FTI Consulting will remain in control of resolving Queensland Nickel's $100 million in debt to major creditors such as listed rail company Aurizon, but they will no longer have control of the refinery, which was close to being shut down over the past week.
The new company, Queensland Nickel Sales, is owned by Mr Palmer's companies, QNI Resources and QNI Metals, which own Yabulu's refinery assets.
The move to wrest back control of the Townsville refinery has effectively killed off the Palaszczuk's government's $10 million offer because it was conditional on the resources-owner-turned-MP having nothing more to do with the business.
Mr Palmer would not reveal how he managed to secure the $23 million in funding, but he said it was not from the banks that knocked back repeated funding requests late last year.
He said the recovering nickel price – which had increased 10 per cent in a week and 18 per cent in past three weeks – had allowed him to lock in the funding which was secured against assets from his other companies.
"The reason why it wasn't available before is because of the nickel price movements," Mr Palmer told The Australian Financial Review.
"It doesn't matter who lends you money, they are all worried about what it's going into. The nickel price is liable to take off, so we were able to arrange funding by pooling other assets."
Mr Palmer's nephew and former managing director of Queensland Nickel, Clive Mensink, who had been sidelined by the administrators, will now be back in charge at the Townsville refinery.
Care and maintenance
Mr Palmer will offer the remaining 550 workers at the refinery the same pay and conditions under the new arrangements and he believed the refinery had a bright long-term future.
FTI Consulting said it had given serious consideration to putting the Yabulu refinery into care and maintenance over the past few weeks due to ongoing trading losses and concerns over safety and environmental issues.
Despite no longer having control over the day-to-day operations, it said it would still evaluate long-term proposals for the refinery and investigate "past management of the company and the underlying reasons for its insolvency".
A second creditors' meeting will still be held in April, but it seems Mr Palmer remains in control of the refinery's future.
Earlier, Mr Palmer said he would consider selling his struggling Townsville nickel refinery to the Queensland government as a way to get around a stand-off with creditors and former staff.
But the new funding is a sign he does not want to relinquish control, and means the Palaszczuk government's offer of $10 million is likely to be taken off the table.
Queensland Treasurer Curtis Pitt said Mr Palmer needed to outline what was going to happen to the refinery under the new arrangements.
"Quite rightly people have been deeply concerned about their own futures because of the uncertainty over the future of the refinery," Mr Pitt.
"They now need to give clear explanations and assurances about what the changes mean for them and their future."
Mr Palmer has proposed a $250 million rescue package – based on putting his coal companies, China First and Waratah Coal up as security – despite many former and current workers saying they don't want anything more to do with the Palmer United Party leader.
He said he was committed to paying 100 per cent of worker entitlements plus interest under any rescue package.
A Townsville-based company is also helping launch a worker-creditor buyout of the refinery, but it has yet to submit a business case to administrators.
There had been growing signs of division between major creditors of Queensland Nickel about how the administrators have been making ultimatums to state government about closing down the refinery – and it then remaining open.
There has also been disquiet about FTI Consulting wanting creditors – which include the Australian Workers Union and former employees – to sign confidentiality agreements to avoid their deliberations becoming public.