Moneycontrol
Last Updated : Sep 20, 2011 12:00 PM IST | Source: PTI

GVK to raise $1bn by selling stake in S'pore arm

GVK Group today said it plans to raise around USD 1 billion by selling a part of its stake in its Singapore-based subsidiary to fund its USD 1.26-billion acquisition of assets of Australia's Hancock Coal.

 
 
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GVK Group today said it plans to raise around USD 1 billion by selling a part of its stake in its Singapore-based subsidiary to fund its USD 1.26-billion acquisition of assets of Australia's Hancock Coal.


"We are looking to divest our stake in GVK Coal Developers (Singapore) but it will not go down less than 51 per cent at any time. Once the plan (of diluting the stake) gets finalised, we will zero down on the actual numbers but certainly, it's around USD 1 billion mark," GVK Power & Infrastructure's Chief Financial Officer Issac George told PTI.


GVK Power & Infrastructure, the listed arm of GVK Group, had said on Friday it would buy coal assets and related logistics in Australia from Hancock for USD 1.26 billion through a group company GVK Coal Developers (Singapore).


The coal assets have resources to the tune of 7.9 billion tonnes."Funding for the acquisition has already been tied up with banks. The acquisition will give us coal security for our upcoming power plants," George said.


When asked about possible investors, he said, "A lot of interested strategic investors have approached us, but the discussions with them are yet to begin."


He added that it will take us about six months to one year's time to finalise the sale in Singapore arm.


On development plans of Hancock's assets, George said the total investment in first phase would be about USD 10 billion. "Of this, our contribution, after divesting stake in GVK Coal, would be around USD 6 billion. This will be funded through debt-equity ratio of 70:30, so our equity contribution would be about USD 1.8 billion," he said.


According to the deal with Hancock, the project is to begin production in 2014 at the rate of 30 mt per year. The production can be increased to 84 million tonnes.


"Besides divesting our stake, we will also outsource a range of activities like coal washing to optimise the cost and bring our investments down to USD 6 billion in first phase from estimated USD 10 billion levels," George said.

He added that the company plans to import 20 million tonnes of coal from the Hancock's assets, once the production starts, to meet needs of  company's domestic power plants.GVK Power and Infrastructure shares today settled 0.59% down at Rs 16.90 a piece on the Bombay Stock Exchange.

First Published on Sep 19, 2011 10:43 pm
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