Aurizon to buy 51% stake in Hancock Coal Infra
Australia's largest rail freight company, Aurizon, will buy 51 percent stake in Hancock Coal Infrastructure, which owns GVK Group's Hancock rail and port projects in Galilee Basin in Queensland, for an undisclosed sum.
Hyderabad: Australia's largest rail freight company, Aurizon, will buy 51 percent stake in Hancock Coal Infrastructure, which owns GVK Group's Hancock rail and port projects in Galilee Basin in Queensland, for an undisclosed sum.
Aurizon and GVK Coal Infrastructure (Singapore) have signed a non-binding term sheet to jointly progress the development of rail and port infrastructure to unlock Galilee Basin coal reserves including GVK Hancock?s Alpha and Kevin's Corner, a statement today said.
Under the proposed framework, Aurizon, would acquire a majority (51 percent) interest in Hancock Coal Infrastructure Pty Ltd (HCI), which owns GVK Hancock's rail and port projects, and would invest through upfront consideration at completion of the transaction and deferred consideration at financial close of each phase of the projects.
In 2011, GVK had acquired 79 percent stake in Alpha Coal and Alpha West projects and a 100 percent stake in the Kevin's Corner project in Queensland from Hancock Prospecting.
Terming the agreement with Aurizon as one of the most significant deals in Queensland's coal history GVK Chairman G V Krishna Reddy said development of the rail and port infrastructure will unlock the Galilee Basin and see the development of Alpha, Kevin's Corner and Alpha West, creating one of the largest integrated coal development projects globally.
"I am sure it will be a win-win relationship leveraging on each other's strengths in project development and operation," Reddy said in the statement.
GVK Vice-Chairman G V Sanjay Reddy said at full capacity, the proposed arrangement is intended to provide sufficient equity and debt funding for the projects to reach financial closure. These projects comprise a greenfield rail project and a development right for a coal terminal at Abbot Point.
GVK Hancock received the primary State and Commonwealth environmental approvals for its greenfield rail project in May and August 2012, respectively. GVK Hancock's port project received Commonwealth environmental approval in October 2012.
Collectively the proposed development of the rail and port infrastructure, which is expected to deliver export capacity of 60 mtpa, could represent an investment for Queensland in the order of USD 6 billion, the statement said.
Following completion of the transaction, Aurizon would gain rights to operate and jointly manage with GVK the rail infrastructure and to exclusively provide above rail haulage from GVK Hancock's Alpha and Kevin's Corner mines for up to 60 mtpa of coal.
Completion of the proposed transaction, including the upfront consideration from Aurizon, would be subject to the satisfaction of a number of conditions including satisfactory due diligence, final Board approvals, third party approvals (some of which are outside the control of the parties) and negotiation of final terms and definitive documentation.