Griffin Coal, the Australian subsidiary of Indian infra giant Lanco, is set to get AUD 50 million as an upfront payment from Bluewaters Power in the third week of January next year towards long-term coal supply agreement, a senior official of Lanco Group has said.
Chief Financial Officer of Lanco Infratech T Adibabu said the amount would help Griffin Coal to meet its financial requirements for the next seven to eight months.
"The agreement with Bluewaters helps the company (Griffin Coal) operate on its own. The company will get AUD 50 million cash immediately as upfront fee between January 15 and 20," Adibabu told PTI.
The Supreme Court of Western Australia last week gave its nod for the Griffin Coal to enter into revised Coal Supply Agreement (CSA) with the Bluewaters power which is set to be sold to a Japanese consortium of Sumitomo Corp and Kansai Electric Power Co for an enterprise value of around USD 1.2 billion.
Under the agreement, Griffin Coal will supply 1.8 million tonnes of coal for over 25 years to Bluewaters Power Station.
The agreement with Bluewaters will fetch Griffin coal additional amount of AUD 150 million (in NPV terms) for the entire course of the agreement including about AUD 50 Million upfront, a senior Lanco Group official had said earlier.
Griffin Coal Mining Company which was taken over Lanco for AUD 730 million in March last year is currently dependent on the parent company for working capital requirements.
"Griffin Coal, which is depending on its parent company Lanco for working capital requirements, can operate on its own for next seven or eight months without any funding requirement," Adibabu said.
James Riordan Company Secretary and Chief Financial Controller of Griffin Coal in an affidavit to the Australian court said the coal miner forecasts that for the year ended November 30, 2013, it will be cash positive by around AUD 80 million on a stand-alone basis based on the agreements it had with Bluewaters and future agreement with other companies.
Lanco India made AUD 132 million of funds available to Griffin Coal from July 2011 to October 2012, approximately AUD 10 million per month.