Gujarat NRE Coking Coal workers and suppliers will receive about $26 million from the troubled Illawarra mining company, if an issue of new shares goes ahead in the next two days.
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The company yesterday contacted the Australian Securities Exchange (ASX) to request its shares be put on hold until tomorrow morning, allowing it time to arrange the details of a deal for Jindal Steel to further increase its Gujarat shareholdings.
The Indian steel and power producer currently owns more than 53 per cent of the Illawarra firm, after shareholders voted to allow it to take control of the financially stressed company in October.
Now, Jindal is set to inject a further $58 million into Gujarat in exchange for about 725 million extra shares, which will be made available through an accelerated rights issue.
According to documents submitted to the ASX by company secretary Sanjay Sharma yesterday, $6 million of the new capital will be used to pay workers and about $20 million will help clear debts with creditors and suppliers.
The Mercury understands Gujarat creditors include various NSW government agencies, the Australian Taxation Office and numerous Illawarra-based and international mining suppliers.
It is unclear if the company will use any of the new funds to pay about $9 million plus interest it owes in carbon tax liabilities.
About $14 million will be used to reimburse Jindal for funds taken out of a $50 million short-term cash loan, while about $18 million will be used to continue running Gujarat's two mines at Russell Vale and Wongawilli.
After the accelerated Jindal Steel deal is finalised, Gujarat plans to open up the rights issue to other shareholders on Thursday, allowing them to buy two shares for every three they already hold at 8¢ a share.
About 625 million new shares will be available, with Gujarat hoping to raise a further $49.85 million.
If shareholders take up the full amount of available holdings, an extra $10 million will be allocated to pay creditors and suppliers while about $40 million will go into running the company.
The total rights issue is expected to be finalised by Christmas Eve.
Meantime, workers are still waiting for the company to pay their missed wages from September and October, as well as the money it owes in superannuation contributions.
Construction, Forestry, Mining and Energy Union district vice-president Bob Timbs said he would meet new Gujarat boss Jasbir Singh today in the hope of agreeing when these entitlements would be paid.
"There are still issues with regards to back pay and super payments that the union is trying to sort out," he said.
"Our members are not all entirely happy with the schedule that has been set out by the company and we are hoping to resolve that as soon as possible."
