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Radio NZ: RAL Liquidator


John Fisk from PwC was interviewed by Kathryn Ryan on Nine to Noon:


Kathryn Ryan: The government has approved another bailout to Central North Island Ski Field operator Ruapehu Alpine Lifts, or I should say, to the voluntary administrators now running the company. It will get $7. 35 million to get its ski field operations through to March, this after receivers warned cash would run out by November. RAL went into voluntary administration last year, blaming a bad ski season and the impact of COVID 19. It was hobbled with 45 million in debt. Of the money announced yesterday, 4.3 million is for continuing operations of the two ski fields, Whakapapa and Turoa, until March, while the remaining 3. 05 million is set aside to support the preferred bidder of the Turoa ski field to complete that purchase, subject to a concession being granted. The latest cash injection brings the government's commitment to bailing out RAL to $20 million. Overall crown contributions are even larger. PWC liquidator John Fisk is with me. So what was the argument for the latest bailout?


John Fisk: If you go back to when we started, there was almost no money in the bank last year, and so we've had a terrific ski season for 2023, and it's still going. In fact, there's some fantastic snow up there still at the moment, but, there is a lot of deferred maintenance and that needs to be addressed. In terms of the funds that we have on hand and what we would need to spend including upgrades to lifts and things like that we said that there would be more money needed. So the $4.3 million represents enough to get us through to March next year.


Kathryn Ryan: Why March next year? What's significant about that?


John Fisk: Well, I think the government has an election coming up in a couple of weeks. So they didn't want to make any commitments at this stage.


Kathryn Ryan: So that's all they'd give you. What's the total, what's the total Crown exposure now? By the time you add up loans that are presumed to be forgiven, the cash bailout, what's the total government exposure?


John Fisk: I think it totals, something close to $50 million if you go right back to the original lending that was done on the Sky Waka. So, it's a significant stake in the business. But also the counterfactual, as we've talked about a number of times, is even worse.


Kathryn Ryan: The counterfactual's what, $150 million to return the mountain to what it was before there was a ski field on it? But we're a third of the way there now, so I suppose that's the question that people are asking. Remind us of the proposed deals on the table for both ski fields and what has happened since the government announced?


John Fisk: There were two deals that were on the table at the time of the Watershed meeting, back in June. That was the preferred options from us that we recommended to the creditors, and those bids are still there, and there are other parties that have shown an interest. What happened yesterday is the government has said that they wanted to support the Pure Turoa bid, and that's where the $3 million would go. They haven't said anything about the Whakapapa side at this stage, and I think the whole process has been held up because of the need for further consultation with Iwi and other parties.


Kathryn Ryan: So was that a fault in this whole process? Because you had the two preferred bidders announced, and then we were hearing that there were Iwi bidders wanting to be involved as well. And one's left wondering, well, how did that happen? How was that not on the table at the time decisions were being made? Was there just a lack of consultation? A lack of communication?


John Fisk: We went into the Watershed meeting expecting that DOC would be ready to transfer concessions to bidders. That actually was not the case. And, we've been advised since that they actually do need to go through a full public consultation process that takes a number of months, and that wasn't anticipated at the time of the Watershed meeting. But it was clearly, something that DOC were advised legally that it had to do.


Kathryn Ryan: But the question is whether Iwi have being sufficiently involved in the future of this operation, full stop, right through the whole process? And I appreciate, it's a process that has to work at speed, but at some point there needs to be due process. Several Iwi, for example, have written to the government demanding a stop to the process, arguing it prejudges the outcome of the Tongariro National Park Treaty settlement. Now, what are the implications of that?


John Fisk: Well that's right because that could take a number of years to resolve. And that's part of the concern that we have is that running a company whether it's in liquidation or in receivership, which seems to be one of the other options being put on the table at the moment, doesn't actually work particularly well. There's extra cost involved and it doesn't give all the stakeholders confidence about what's going to happen in the future. So one of the things that we've suggested is that's a temporary solution be put in place which could be for two or three years to enable that consultation process to be completed. To do that you could set up a NewCo or a HoldCo that has the appropriate governance in place with Iwi representation or Crown representation, whatever is needed to maintain the status quo whilst those negotiations continue.


Kathryn Ryan: Wouldn't that kind of have been logical at the outset? And you have Iwi interests in the mountain, they're fundamental to the operation as it stands right now, and to the fact that RAL's been able to operate there at all. So you leave wondering whether the ball was dropped right at the start, and it would have been easier to get an agreement for an interim arrangement right from the start, had there been better consultation?


John Fisk: Yeah, it's easy to say in hindsight, and what I'm really concerned about is, to use Yogi Berra's quote, "It feels like deja vu all over again". You know we're looking at a situation where we are in almost exactly the same position we were in last year, and to complete those negotiations and be open for the 2024 season under new ownership is going to be challenging.


And, do we need to actually look at a different process so that we keep all the options on the table? Pure Tūrā could well be part of that as well. But there needs to be something that is hammered out around the table, that everyone can agree.


Kathryn Ryan: Will those private investors stay on board if this becomes the path forward? Or will they say, "Nah, too hard, we're out"?


John Fisk: Well they've certainly stayed on board so far. And, they can see something that is worth pursuing and when you look at RAL, it survived for 69 years, without needing government assistance. So, there is a business there that can be operated. But, we're in an environment now where there does need to be greater consultation with Iwi and that needs to be respected.


Kathryn Ryan: You've still got the shareholders and the Life Pass members group in the background saying make "We'll come in and do it." Are they still in the mix for whatever's going forward?


John Fisk: They are still in the mix. I mean, I think the problem is though I think operating the old RAL company is really problematic. Um, you know, it's got a whole lot of debt. It's an insolvent company. It's got a whole lot of shareholders. All those issues make it much more complicated. And that's why a sort of a clean NewCo what we've suggested as being a potential way forward.


Kathryn Ryan: Thank you very much. That is John Fisk. He is the PwC Liquidator with the latest. Some more cash going to the company. Well, going to the liquidators now, running the company that was RAL to give them a bit of an extension through till March. The saga continues.

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