Bank deals boost Gujarat's finances

Gujarat NRE Coking Coal's new owners appear to be turning the troubled company's fortunes around, brokering deals with several major Indian banks to secure new loans, along with extra time to pay back hefty outstanding loans.

In a corporate update to the Australian Securities Exchange, company secretary Sanjay Sharma said the miner had "restored and significantly improved [Gujarat's] operations and production".

He said the company had shipped out 108,000 tonnes of coal in late December and was preparing to ship 85,000 tonnes in the next few weeks.

Mr Sharma also announced the State Bank of India had sanctioned a new line of credit, worth $52.42 million, which includes a loan of $35 million.

The major Indian bank will also give Gujarat NRE Wonga - a fully owned subsidiary of Gujarat NRE Coking Coal - more than five extra years to pay back a $37.5 million loan, which was previously due for repayment by December.

It will allow the loan to be repaid by June 2020 and Gujarat will not have to pay anything for two years.

Meantime, the Indian Bank of Baroda had also agreed to revise the terms of a $25 million loan, which was due to be paid by July this year, Mr Sharma said.

The new agreement will allow Gujarat to repay the loan over 5½ years, instead of two years, and the company will not have to pay anything for more than three years.

In another boost to Gujarat finances, one of its major financiers, Axis Bank Limited, has expressed interest in buying up to 46 million shares.

Under the deal, the private bank would invest about $3.6 million, buying shares at a price nearly 2¢ higher than their current market value.

The extra credit and extensions of time are good news for Gujarat's future prospects and could indicate Jindal Steel's long-term intentions to continue operating the mines.

Prior to the takeover, Gujarat's annual report revealed it had $487.88 million worth of debts to pay within the next year, leaving major doubts over its ability to continue trading.

Meanwhile, a deal allowing Gujarat shareholders to purchase two shares for every three they already hold is due to close today.

Company Secretary Sanjay Sharma.

Company Secretary Sanjay Sharma.

The company hopes this will raise $49.85 million, allowing them to pay an extra $10 million to creditors and invest a further $40 million into running Wongawilli and Russell Vale mines.


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