Rey shareholders will be given the extra option of going for the cash or the previously proposed 1 Gujarat share for every 5 Rey shares offer, should they choose to participate.

Gujarat said the introduction of a cash offer will allow Rey shareholders to sell their shares for cash given the lack of liquidity in Rey shares and the fact they have risen on low volume and in line with rises in Gujarat shares.

Rey shares were trading at 14.5c this morning, but after the first Gujarat bid announcement on June 3 they lifted from a close on the previous day of 6.4c to 12c two days later, while they were in 5c territory for most of May.

Gujarat shares on the other hand closed at 56c on the day of its initial bid announcement and are trading around 58.5c this morning.

The coking coal producer has also lowered the minimum acceptance condition for its takeover bid for Rey from the previous 90% to 50.1% by the end of the offer period, which is yet to be announced.

Gujarat said its takeover bid will no longer be subject to satisfying the shareholder approval condition, while its previous scrip-based bid was rejected by Rey’s board.

Gujarat chairman Arun Jagatramka, who has since resigned from his position as a Rey director, said Rey’s management has underperformed with unlocking value from its Canning Basin coal project in Western Australia.

Days prior to Gujarat’s first offer, Rey upgraded the JORC-compliant resources at its wholly owned Duchess-Paradise project in the Canning Basin to an indicated resource of 144 million tonnes of thermal coal. The company’s total resources are 511Mt.

“Rey’s progress has been limited to minor exploration announcements and small equity raisings to fund working capital to remain operational,” Jagatramka said.

“The Gujarat Group invested in Rey in October 2005 and the lack of meaningful progress in developing these assets has been frustrating to the point of Gujarat now making this offer to acquire Rey.”

Meanwhile, Jagatramka has told the Hindu Business Line newspaper the company was looking to close its takeover for Rey in the next five months or so.

An Australian-listed subsidiary of Indian coking coal producer Gujarat NRE Coke, the company has about 20% of Rey’s issued shares.