India's GVK bid for Australia's Hancock delayed over valuation-sources

Thu Sep 8, 2011

SYDNEY/MUMBAI, Sept 8 (Reuters) - Efforts to finalise a $2 billion-plus bid by India's GVK Power & Infrastructure for two Australian coal mines owned by Hancock Prospecting have been delayed due to differences over valuation, sources familiar with the situation said on Thursday.

GVK had been due to announce the long-awaited deal this week but Hancock's owner, Gina Rinehart, had sought last-minute changes to the agreement, one of the sources told Reuters.

GVK's negotiations to buy the Alpha Coal and Kevin's Corner mines began in February. Deadlines for exclusive talks between the two sides have been extended repeatedly throughout the year, according to other sources.

Finalising the deal had been delayed mainly due to "some valuation issues", one of the sources told Reuters.

A second source said there was no indication how long it would take to resolve the latest differences or whether they might lead to the deal's collapse.

Hancock and GVK did not immediately respond to calls for comment.

India's Economic Times said last month GVK planned to pay $2.2 billion for the mines. As part of the deal the company would pay $900 million to develop transport infrastructure to carry the coal to the port, the newspaper said.

A $1.2 billion loan would be provided by banks to back the bid, banking sources told Thomson Reuters' Basis Point.

The banks include ICICI Bank , Axis Bank , Bank of Baroda and Bank of India. Standard Chartered had dropped out of financing of the deal, sources said.

India holds 10 percent of the world's coal reserves, but local supplies are falling short of demand as the country builds more power plants, and as domestic coal projects run into environmental and land acquisition delays.

Indian energy firms have been scouting for coal assets overseas to feed power plants at home, and have been raising funds for potential overseas acquisitions and expanding facilities.