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Jindal Steel may be second time unlucky with Rocklands

Shubhashish  |  Mumbai 

Jindal Steel has made a renewed attempt at acquiring Australian coal-miner Rocklands Richfields, though it is unclear if this would be any more successful than earlier.

Jindal has increased the price and extended the deadline 10 days before it was to expire, of its open offer to shareholders.

Jindal Steel, on May 26, increased its offer price for the shares to $0.3 per share from $0.25. The company also extended the deadline for the open offer date from June 6 to June 20. However, the increased offer price of $0.3 per share is below the price at which the shares are traded currently. The share price of Rocklands was trading at $0.31 per share at the Australian Stock Exchange on Thursday.

Jindal, before the start of the offer, held 14.5 per cent of Rocklands. The company did not divulge whether it managed to get hold of more during the open offer as Sushil Maroo, director (finance), Jindal Steel and Power, could not be reached for a comment.

Rocklands, meanwhile, has been vehemently trying to ensure its investors do not tender their shares to Jindal’s open offer. The company asked its shareholders to reject the deal in a letter dated April 21 when Jindal made the first offer.

On April 21, the company told its shareholders that the offer was not commercially recommended by the company on two grounds — Jindal’s earlier offer of 2009 at $0.6 per share was significantly higher than the current one and the surge in coal demand because of the recent earthquakes in Japan.

It said, "The demand for coal has been increasing as some countries have looked to coal as a replacement for nuclear capacity."

In its response to Jindal’s revised offer of May 26, Rocklands, in a statement to the Australian Stock Exchange, said, "According to the independent expert's report dated May 12 by BDO Securities Pty Ltd, the independent expert assesses the RCI shares, on a diluted basis, at a mid-point value of $0.49 per share. On that basis, the independent expert concluded that Jindal's offer was not fair and not reasonable."

The company said the revised offer is still less than the mid-point value of RCI shares. Based on the above facts, the independent directors of RCI have asked the shareholders to reject Jindal's revised offer.

Jindal, on April 20, had announced its bid to buy all the available shares of Rocklands from the open market at $0.25 per share valuing the company at $88 million.

Earlier, in 2009, Jindal had tried to buy Rocklands and was locked in a three-way battle with Essar Steel of India and Meijin Steel of China. At that time, Jindal had offered to pay $0.4 per share, which was later upped to $0.6 per share due to the intense bidding by the other two. However, none of the were then able to complete the acquisition.

Rocklands’ main activity is exploration of coal and it has a few high-grade coking coal deposits in the Bowen Basin of Queensland. The company also has a 480,000-tonnes per annum coking coal plant located in eastern China, currently making operating losses.

First Published: Fri, June 10 2011. 00:11 IST