Bangalore-based GMR Infrastructure is in the process of divesting its two major coal-mining assets in South Africa, which it holds through the Canada-listed Homeland Energy Group in a $50-million deal.
Homeland Mining and Energy SA Proprietary, a wholly-owned subsidiary of the Homeland Energy Group, has divested its stake in the coal assets to multiple buyers.
GMR Energy, a subsidiary of GMR Infrastructure, holds a 55.84-per cent stake in Homeland Energy Group, a Toronto-listed company which owns the Kendal mines and the partly-explored Eloff mines in South Africa through Homeland Mining and Energy.
In a statement, Homeland Energy Group said it had entered into an agreement to dispose of its 50 per cent stake in Eloff mines for around $12 million, through the stake sale of Tshedza Mining Resource, which holds the licence for the development of Eloff mines.
''The purchaser is the company's current BEE (black economic empowerment) partner, which already holds a 50-per cent interest in the property," said the statement. BEE is a voluntary programme for companies to address the inequalities of native groups in South Africa.
An initial payment has been made and the balance will be paid upon receipt of the required regulatory approvals in South Africa. The funds will be used to pay off the bank loan taken from ICICI Bank, while part of it will be used for general working capital.
Homeland said the decision to divest Eloff was made after a feasibility study indicated the quality of the coal there could only be economically sold to ESKOM, a South African electricity public utility, or to export to India.
''The logistics and infrastructure difficulties and evacuation costs would make export uneconomical. The risks associated with the substantial capital cost of commencing production at Eloff were considered to be too high given the limited upside of the project,'' said Homeland.
According to GMR Infrastructure, Homeland has also entered into an agreement for the sale of its entire shareholding of moderate coal resource Kendal mines as well. The Kendal mines currently have annual capacity of 1.8 million tonnes on a resource base of 34 million tonnes.
With these moves, GMR Infrastructure is taking forward its 'asset light - asset right' strategy. Earlier, GMR had divested its entire 70-per cent stake in a Singapore-based power project and 74 per cent stake in a highway project, raising a total of around Rs2,500 crore.
GMR had initiated the asset-light strategy during early 2012 as it was under a debt burden of Rs37,000 crore.
The company is further working on a floating a business trust in Singapore consisting of its highway assets through which it intends to raise close to $500 million.