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Australia,India : JSPL announced acquisition of a 31.49% stake in GUJARAT NRE COKING COAL LTD via all-cash deal.

Jindal Steel & Power Ltd (JSPL) has announced that the Naveen Jindal-led company has been successful to purchase a 31.49% stake in the Australian Securities Exchange-listed Gujarat NRE Coking Coal Ltd at the conclusion of its all-cash acquisition offer on 28th march, 2013.

Gujarat NRE Coking Coal Ltd is the Australian subsidiary of Gujarat NRE Coke, which is based in Kolkata.

In spite of resistance from the promoter of Gujarat NRE Coking Coal Ltd, the company had planned to buy the entire part of balance shares of the Australian firm via offering per share price of Aus $0.20.

However, after the closure of the purchase offer, it looked that JSPL had been successful to obtain the largest part of the balance non-promoter shares of Gujarat NRE Coking Coal.

Gujarat NRE Coke Ltd (GNCL), which is traded on the BSE as well as the NSE, owns about 68% in the Aussie firm that operates two coking coal mines there. The two mines NRE No. 1 and NRE Wongawilli are positioned in the Illawarra region of New South Wales, Australia.

The website of GNCL has revealed that the company has strategy to boost the hard coking coal production from around 1.5mt per annum to more than 5 million tonnes (mt) per annum within the year 2016, which will turn it one of the main 10 producers in the globe.

According to close JSPL sources, the company will not be dejected with the stake since it may now facilitate it to ask for a place in the board with power over major decisions.

Considering almost nil possibility of any public drifting towards the Gujarat NRE Coking Coal Ltd excluding the two key sets of investors, GNCL and JSPL, it is expected that the same will be withdrawn from the ASX.

In 2012, JSPL was made a strategic partner by the Australian company while the latter floated a private placement offer in order to collect funds. The Jindal firm had acquired a 10% stake for Rs 138 crore or per share price of Aus $0.25.

Gujarat NRE Coking Coal had decided to sell yearly 0.5mt of hard coking coal to JSPL for a 10-year phase with the option of offering the same amount at par with the market price. Then, the promoter of Gujarat NRE Coking Coal - Arun Kumar Jagatramka did not have any problem with Jindal.

However, JSPL s offering of an acquisition bid later in the year for each share price of Aus $0.20 made Jagatramka unhappy as he thought that the price undervalued the company and then he urged the minority investors to decline the bid citing this reason.

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Publication:Mena Report
Date:Apr 2, 2013
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