Shareholders of Australian Securities Exchange (ASX)-listed Gujarat NRE Coking Coal Ltd (GNCCL) have given the green signal to allow Naveen Jindal-led Jindal Steel and Power Ltd (JSPL) to pick a majority stake in the firm through a preferential allotment over a period.
The shareholders of GNCCL gave their consent to allow JSPL to subscribe to 328.5 million new shares at $0.2 a share, as well as around 328.5 million unlisted transferable options (convertible to equity) in the Australian mining company which shall be exercisable at nil consideration within a period of five years from the date of issue of the option.
With the first tranche of issue of shares, JSPL’s holding in the firm would increase to 44.68 per cent and upon the exercise of the options it would increase to up to 53.62 per cent.
JSPL through its arms already owns 31.5 per cent in the loss making Australian subsidiary of Gujarat NRE Coke. With the proposed preferential allotment worth $65.7 million it will hike its holding to 53.6 per cent.
Half of this money would be used to repay JSPL itself, which had previously committed to put in $45 million in GNCCL through subscription of convertible note, of which it has already brought in $31 million.
The deal also involves two separate offtake agreements of coking coal between the Australian mining company and Jindal Group as well as with the Gujarat NRE Group.
JSPL had first acquired around 9 per cent in the Australian firm for $25 million last year subscribing to fresh shares at $0.25 a unit. It later raised it to around 19.5 per cent and had made an offer to acquire the rest of the firm which wasn’t too successful and it ended up with 31.5 per cent of the total early this year.
The Australian firm owns and operates two hard coking coal mines in the southern coal fields of New South Wales in Australia. These mines – NRE No 1 Colliery and NRE Wongawilli Colliery – contain estimated coal reserves of 125 million tonnes and resources of 651 million tonnes.
Bulk of the coal production is sold to its parent company Gujarat NRE Coke at market price. The parent firm is one of the largest independent manufacturers of metallurgical coke in India.