Thursday, December 23, 2010

Acquired Griffin for A$750 million: Lanco

Infrastructure company Lanco Infratech (Lagadapati Madhusudhana Rao, Chairman and MD) today said it has acquired Australia-based Griffin Coal Mining for A$750 million (around Rs 3,375 crore). The company which announced the acquisition last week, announced the numbers to beat speculations at A$800-850 million.

The payment will be made through a mix of internal accruals and debt. The company has already tied-up a loan from ICICI Bank for a three-year tenure, with an option to extend it further.

Suresh Kumar, the chief financial officer of Lanco, in an analyst conference call, said the payment for the coal mining company would be done in tranches. “There is an upfront payment and there are two tranches of payments over a period of four years. The deferred payments are high. I would not be able to mention how much, but it is definitely higher than 10-20 per cent.”

Kumar also assured analysts that the acquisition will not be a strain on the balance sheet as they had acquired an operating asset. The coal mine based out of Collie in Western Australia, owns the largest operational thermal coal mines in the region.

Lanco also said capex towards Griffin’s development will be around A$900 million (around Rs 4,050 crore). The company, however, expects this cost would come down significantly if they were to employ a mining contractor.

The company also feels there was a huge scope to bring in operational efficiencies in areas like employee productivity and machinery utilisation and cost incurred by the company even further.

The mine currently produces around 4.5 million tonnes coal per annum (mtpa), and supplies three million tonnes to the Australian market, while 1.5 million tonnes is exported to China, Japan and India. Of this, the company is committed to supply two million tonnes of coal to a power plant which was owned by Griffin coal, but the assets were not a part of the acquired entity.

The capacity of the coal assets of Griffin can be ramped up to over 15 mtpa in the near term, after the development of evacuation facilities like rail and port infrastructure. The mining tenements of the company contain over 1.1 billion tonnes of thermal coal resources.

Griffin, which was formerly owned by tycoon Ric Stowe, was forced to sell it because it was weighed down by a huge debt burden. Lanco, however, will not be acquiring any debt liabilities of the company.

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