GMR Energy to buy Indonesian firm

NEW DELHI: GMR Energy is set to acquire a $100 million Indonesian mining company PT Barasentosa Lestari. V Subba Rao, CFO and president of GMR Infrastructure said, "We have lined up the debt and are waiting for government approval from Indonesia. The acquisition could be complete anytime in the next few weeks."
The acquisition is a part of the backward integration plan of GMR Energy, which is foraying into coal and hydel power projects.In all probability, the Indonesian company will supply coal to two of GMR's greenfield power plants coming up in Orissa and Chattisgarh. However, the company has plans to set up a 1,000 to 1,500 MW coal-fired thermal power plant on the western coast.
In addition, it has already done the land survey in Maharashtra and Gujarat for two other power plants. "The company plans to increase its domestic power generation capacity from 800 MW to 3,000 MW by 2013," Subba Rao said.
Barasentosa has 115 million tonne of coal reserves and Rao said, "We zeroed down on the Indonesian company after due diligence and the company was found satisfactory on the coal quality and quantity." GMR is likely to pick up a stake in an indirect holding company as Indonesia prohibits direct foreign ownership of coal mines.
Even though the GMR Infra has been looking for coal mines for sometimes, it had backed off from acquiring a 50% stake in South African mining and energy company Homeland Mining as it was not found satisfactory after due diligence.
Even though Homeland Mining had been given an advance of 10% of the total deal money of $155 million, GMR has asked for an exit route through two options: Either refund the advance money or through issuance of shares in the holding company. Rao said, "The due date for exit close is over but the South African company has sought an extension."
One of the biggest buy by GMR last year was the 50% stake in Dutch power generator Intergen NV for $1.1 billion and in future it would like to source 10 to 15 million tonne per annum linked to power plant development.