GVK group in talks to buy two Australian coal mines
19 May 2011
Hyderabad-based GVK Power & Infrastructure Ltd, is in talks to borrow as much as $850 million to fund the purchase of two coal mines of Australia's Hancock Prospecting Pty.
Citing two people with knowledge of the negotiations, Bloomberg today reported that GVK, controlled by Indian billionaire GV Krishna Reddy will use the money to pay Hancock $500 million for equity in the mines, and another $350 million as compensation for costs incurred for running them.
GVK is in talks with investors including 3i Group plc and Actis Capital for the funds. GVK is likely to pay around $1.5 billion for Hancock's Alpha Coal and Kevin's Corner mines, according to the report.
Banks may charge GVK about 425 basis points above Libor, according to one of the people who spoke to the news agency.
Founded in 1992, West Perth, Australia-based Hancock Prospecting is a junior coal and iron ore miner.
The Alpha Coal mine is a thermal coal deposit within the Galilee Basin in Central Queensland. The mine, which has an expected mine life of 30 plus years will be a 30 Mtpa open-cut coal mine with sufficient resources to extend the project life well beyond 30 years. The Alpha Coal and Kevin's Corner combined resource is 7.9 billion tonnes of JORC compliant thermal coal.