Stockbroker BBY has underwritten Rey’s bid and has also served as the junior’s capital market adviser in respect to Gujarat’s bid, according to the Takeovers Panel.

“Gujarat submits that the rights issue is a frustrating action and is likely to result in

BBY obtaining a substantial interest (up to 12 per cent) in Rey,” the panel said.

“Gujarat seeks interim orders, including that Rey be restrained from proceeding with the rights issue.

“Gujarat seeks a final order to a similar effect, or if the rights issue is allowed to proceed, that a shortfall facility is implemented and BBY announce its intentions in relation to the Gujarat bid.”

No decision has been made by the panel on whether to conduct proceedings at this stage.

Gujarat’s bid was made more than two weeks ago and consisted of one of its shares for every five Rey shares, and was also subject to conditions including a 90% minimum acceptance condition.

The bid valued Rey shares at 9c, a considerable premium to the 5c territory it occupied for most of last month.

Rey’s rights issue is expected to raise $A2.75 million.

Proceeds are intended to further advance Rey’s wholly owned Duchess-Paradise project in Western Australia’s Canning Basin.

The project has an indicated resource of 144 million tonnes of thermal coal and total resources of 511Mt.

Gujarat has previously voiced its views on how far the $2.75 million might go.

“We believe that the proposed amount of raising is not sufficient to complete the proposed prefeasibility study and a material amount will be absorbed in undertaking the rights issue and defending Gujarat’s bid,” Gujarat said last week.

Gujarat’s Indian parent company owns 16.7% of Rey and on the day of the bid Gujarat chairman Arun Jagatramka resigned from his position as a Rey director.

Shares in Gujarat are down 3c this morning to 56c while Rey shares remain unchanged at 9.5c.