Bangalore-based GMR Infrastructure Ltd has taken a stake in Canada's Homeland Energy Group Ltd, the parent company of South African subsidiary Homeland Mining Energy. GMR was originally planning to acquire a 50% stake in the South African firm for $155 million. Now GMR is getting a stake in the parent company Homeland Energy itself.
The shares have been issued to GMR so that Homeland Energy could retain 100% stake in its South African subsidiary Homeland Mining Energy. The infrastructure developer dropped its plan to acquire a 50% stake in Homeland Mining Energy late last year. Homeland Energy has issued about 75.8 million shares at C$0,46 to GMR Energy, which comes to nearly $28 million. GMR had picked up the 10% stake for $30 million April 2008.
GMR was renegotiating the deal price and wanted to buyout the company for as low as $100 million. GMR had valued the company at $310 million when it acquired the stake in April 2008. It had successfully reduced the acquisition price of Netherlands-based Intergen from $1.1 billion to $954 million.
"This share issue eliminates $30 million in debt and allows Homeland to focus on building its business, developing its South African projects and carrying on discussions regarding the purchase of Appolo Mines and Diversified Energy in the Central Appalachian region of the United States," commented Tom Griffis, Chairman of Homeland's Board of Directors.
Homeland Energy Group Ltd. is a coal producer with operations in the Witbank area of South Africa. It claims to have 400 million tonnes of coal reserves. GMR is looking to acquire mining assets for its greenfield power projects. GMR is also looking to acquire coal assets in Indonesia.
