White knight investor and key shareholder Jindal Steel recently completed acquiring $A65.7 million-worth of Gujarat shares, lifting its stake of the Illawarra coal producer to 53.63%.
At the end of October, Gujarat further envisioned a non-renounceable rights issue to raise up to $300 million of further funds, but the rights issue plans announced yesterday aim to raise $108 million.
Based on issuing 2 new shares for every 3 held, the issue price is at 8c each, which is 60% lower than the 20c per share Jindal paid under the recent share offer it took part in.
Gujarat said Jindal aimed to take up its full entitlement of about $58 million in this rights issue, with a prospectus for it to be lodged with the Australian Securities Investment Commission in seven to 10 days.
The longwall miner said the funds from this issue would be used to pay outstanding workforce salaries, accrued interest, and repay loan amounts received under the Jindal-financed $50 million short-term loan facility.
In its update, Gujarat also revealed that the terms of this facility, which could be drawn down in tranches of $500,000, included monthly interest payments calculated at 15% of the outstanding balance.
Last month, Gujarat was subject to a wind up application from RUS Mining Services. Gujarat said it received a notice of appearance from the OSR to appear and it applicable, to support RUS’ application.
The coal miner also said it was served with statutory demands from “a few of its creditors” over unpaid amounts.
“The company is dealing with and managing each of these statutory demands on their merits with a view to resolving any outstanding issues,” Gujarat said.
In reference to the recent appointment of Jindal Steel’s Jasbir Singh as Gujarat’s executive chairman, it said it remained in discussions with all creditors over paying outstanding amounts and would update the market as necessary.
The windup applications have also made the federal government withdraw the funding under the Australian government’s Coal Sector Jobs Package designed to offset carbon tax liabilities.
“The company is investigating all possible options for gaining ongoing funding as part of the Government’s Coal Sector Jobs Package, with the long term aim of using this to offset current carbon tax liabilities,” Gujarat said.
