JSW Energy, that went public late last year, has hiked its offer price by 20% to buy South African Coal Mining Holdings(SACMH). It has struck a deal to acquire a majority stake in SACMH for around R85 million (South African Rand) (~ Rs 51 crore) from its largest shareholders that will help the company gain access to coal mines to feed its Indian power plants.
Under the deal, JSW Energy is purchasing majority stake from two shareholders including Royal Bafokeng Capital. It has acquired 49.8% in Royal Bafokeng Capital(Proprietary) Ltd and has the option to acquire the balance equity too. In addition, JSW Energy has also struck a deal and has the option to acquire entire holding of Mainsale 55 Trading (Proprietary) Ltd.
These two entities own 284.6 million shares of SACMHL and JSW Energy will pay a price of 30 cents each. This comes as a revised term of an offer made by JSW Energy to SACMHL last month and will mean higher selling price for minority shareholders of JSE-listed SACMHL.
In the previous offer JSW Enery had proposed to lend 70 million Rand (~$9.5 million) to SACMHL so that it can repay around 40 million owed to the The Standard Bank of South Africa and get in return 71.8 million shares owned by the bank. It also offered to buy the minority shareholders of SACMHL owning 29.07% of the company at 25 cents share each.
The upward revision in price could be on account of a competing bid for SACMHL. Standard Bank of South Africa had entered into an agreement with Shanduka Coal (Proprietary) Limited to sell its secured claim against SACMH to Shanduka and to grant it a period of exclusivity for the same. Thereafter Shanduka sent its offer to the SACMHL board on March 18.
The board had recommend Sanduka’s proposal to its shareholders as it felt that the JSW Offer, as it stood then, was less attractive than Shanduka’s. It is to be seen if Shanduka raises the stake further for JSW Energy.
SACMH has stakes in two coal mines: Ilanga in the Witbank Coal Field (200 km east of Johannesburg) which has been operational since 1996 and has effectively reached the end of its mine life & Umlabu Colliery (situated in Mpumalanga), an opencast and close pit mine where operations commenced in February 2003. Umlabu has an expected life of mine of 19 years.
JSW Energy is the power arm of Sajjan Jindal led section of the OP Jindal group (he also leads JSW Steel, the country’s second largest private steel maker). JSW Energy is backed by hedge fund Eton Park besides Indus Capital.