Awash in Red Ink, Australian Firm Seen as Having Little Financial Ability to Deliver on 2 Major Planned Export Terminals in Washington and Oregon.
SEATTLE, Feb. 13, 2013 /PRNewswire-USNewswire/ -- Ambre Energy, an Australian company that is currently touting plans for a pair of controversial coal export terminal sites in Washington and Oregon, faces mounting financial, regulatory and other challenges that make it unlikely to deliver on its promises in the U.S., according to a new report for the nonprofit Sightline Institute.
Available online at http://www.sightline.org/ambre, "Ambre Energy: Caveat Investor," the report catalogues a number of money woes for the company, including money-losing coal mines, large write-offs for failed overseas ventures, major liabilities for mine cleanup and pensions, troubled assets, high borrowing costs, and a need for $1 billion in new capital to make its coal projects financially viable.
Highlights of the report include the following:
- Substantial losses. Since it was founded in 2005, Ambre has racked up more than $124 million (Australian dollars) in accumulated losses, while taking in less than $7 million in revenues.
- High borrowing costs. Ambre's financial records show loans with annual interest rates of 10 to 12 percent—strikingly high rates at a time when junk bond yields have fallen below 6 percent.
- Money-losing coal mines: The company's recently acquired U.S. mining business has hemorrhaged money, and one of its two mines recently announced plans to lay off nearly half its work force.
- Massive liabilities. Ambre's recent U.S. asset purchases come attached with massive mine acquisition, reclamation, pension, and medical obligations of at least $240 million.
- Substantial capital needs. Ambre needs roughly $1 billion in additional financing to move its coal export plans to fruition.
- Failed overseas venture. The government of Queensland, Australia recently blocked Ambre's proposed coal-to-liquids venture, forcing Ambre to recognize a $10.7 million loss.
- Regulatory uncertainty. The company's coal projects face lengthy and costly environmental review requirements, permitting uncertainties, and new questions about its plans to avoid federal royalty payments by selling coal between its own subsidiaries.
- High-risk business plans. Even if Ambre can manage to bring its coal terminals online, it will still be exposed to sizable risks from rail and shipping costs, volatile international coal prices, and competition from better-established coal exporting rivals on the Pacific Rim.