JSPL stakes up in Gujarat NRE's Oz arm

Jindal Steel and Power has picked up additional 2.67 per cent stake in GNCCL - Gujarat NRE Coal's Australian subsidiary - for AUD 7.5 million (about Rs 43.44 crore), taking its holding to 12.74 per cent.

In May, the Naveen Jindal-led firm had acquired 10.07 per cent stake in Gujarat NRE Coking Coal Ltd (GNCCL), for about AUD 25 million (about Rs 135 crore).

In a statement, GNCCL said that the funds from the share sale will be used for expanding the capacity of two coking coal mines to 6 million tonnes per annum (MTPA).

"The securing strong off-take partners is important as we continue the expansion of our two mines to our planned levels of over 6 MTPA and the placement funds will be utilised in our expansion project," the company's Executive Chairman Arun Kumar Jagatramka said in the statement.

Besides, Gujarat NRE will also sell 2 lakh tonnes of raw coal (run-of mine coal) annually to JSPL at a benchmark linked price.

"As part of the agreement, the company will issue and allot a further 30,000,000 fully paid ordinary shares to Jindal Steel & Power (Mauritius) Limited at AUD 0.25 per share raising AUD 7,500,000," it added.

Jindal Steel & Power (Mauritius) is the Mauritius-based subsidiary of JSPL. Going by the total issued shares at 1,12,31,37,858 of GNCCL, today's transaction amounts to 2.67 per cent share sale to the Naveen Jindal-led firm.

According to Gujarat NRE, this share sale represents a premium of about 47 per cent to the current market price of GNCCL, which is listed at the Australian Securities Exchange.

While acquiring stake in GNCCL in May, JSPL had also signed a long term contract to buy 5 million tonne of coking coal over a 10-year period from the Australian subsidiary of Gujarat NRE. The company also has the option to increase its purchase further by additional 5 lakh tonne in a year.

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