SA firm offers 33.5% stake to GMR Energy

GMR Energy, the subsidiary of GMR Infrastructure, has been offered a 33.53 per cent stake in South Africa-based Homeland Energy Group after the Indian firm decided to exit from the latter’s subsidiary. According to the new offer, GMR could sell back its 10 per cent stake in Homeland Mining & Energy SA to the parent company. Homeland Energy Group said the shareholders have approved the issuance of 75.79 million shares to GMR Energy at Canadian $0.46 per share.

At the offer price, the 33.53 per cent would cost $28.29 million for GMR. The stake will be transferred to GMR when it gives the 10 per cent stake in Homeland Mining & Energy SA back to the parent company. GMR had bought the stake in April 2008 paying $30 million (around Rs 150 crore). During the time of the acquisition, GMR reserved its right to increase the stake up to 50 per cent by September 2008 at $155 million (around Rs 775 crore). The parent company decided to repurchase GMR’s current 10 per cent ownership in accordance with the terms of the share purchase agreement. Under the agreement, Homeland has the right to satisfy the obligation in cash or in shares of the company. The company has until January 4 to make the repayment. The share issue to GMR was approved by 99.8 per cent shareholders of the parent firm at a special meeting held on December 30.

In November, GMR had decided to back out from its acquisition of 50 per cent stake in Homeland. Declining coal prices and findings in the due diligence had forced the company to withdraw its offer. Before it took the decision, GMR had bought 10 per cent stake in Homeland for $30 million.

GMR’s decision to back out came after a round of price renegotiation with Homeland failed. The company had earlier successfully bargained a price reduction for acquiring the Netherlands-based Intergen.

GMR Energy had decided to acquire stake in Homeland’s subsidiary for sourcing coal for its two proposed power plants in Orissa and Chhattisgarh, with a combined capacity of 3,150 mw. The South African subsidiary owns Kendal Mine, Eloff coal mining project, the Northfield site reclamation project.