Bangalore-based GMR Energy Ltd, a subsidiary of GMR Infrastructure, has entered into a definitive agreement to acquire 30 per cent equity stake in PT Golden Energy Mines Tbk (GEMS), a Sinar Mas Group company in Indonesia, at an estimated price of $450-$550 million, GMR Infra has said in a statement to the on Friday.
The acquisition will be funded through a combination of debt and internal accruals, and will be made through an offshore special purpose vehicle (SPV), domiciled in Singapore. The transaction is subject to the fulfilment of several conditions precedent and is expected to close in calendar year 2011.
Incorporated in 1997, GEMS is an unlisted subsidiary of PT Dian Swastatika Sentosa (DSS), one of the Sinar Mas Group’s Jakarta-listed companies. The company owns four producing and six non-producing thermal coal concessions in Indonesia.
Under this deal, GMR Energy has entered into an off-take agreement with GEMS, which entitles the former to purchase coal over the next 25 years, starting from January 1, 2012. The annual off-take will steadily increase to 10 million tonnes over the coming years, the statement adds.
“GEMS represent a unique opportunity to invest in a high quality asset with strong growth potential, given its coal reserves of over 860 Million tonnes and coal resources of 1.9 billion tonnes. The off-take agreement will give GEL access to the required quality of coal from one of the lowest-cost producers in Indonesia,” said Raaj Kumar, CEO of GMR Energy Ltd.
“It will provide fuel security for our power plants under construction, and also support further capacity addition and trading,” B V N Rao, business chairman of GMR Energy Ltd, commented on the deal.
Shares of GMR Infrastructure were trading at Rs 30.90 per scrip on the BSE during early morning trade, up 3.5 per cent from the previous close of Rs 29.85.
Incidentally, GMR Energy has 16 power projects of which three are operational and 13 are under various stages of implementation. There are also nine road projects, of which six are currently operational and three are under construction.
GMR Infrastructure Ltd is the infrastructure holding company, formed to fund the capital requirements of various infrastructure projects in the GMR Group’s energy, highways and airport businesses. It undertakes the development of infrastructure projects through its various subsidiaries.]
The Sinar Mas Group is one of the largest Indonesian business conglomerates, with interests in agribusiness, property, pulp and paper, finance, telecommunications and mining business, and a market capitalisation of over $15 billion.