India's GVK reaches $2.2bn Hancock mines deal: Report

MUMBAI/SYDNEY: India's GVK Power & Infra is close to finalising a deal to buy two Australian coal mines owned by Hancock Prospecting, said two sources with knowledge of the deal, which a newspaper report said has been agreed for $2.2 billion.

The GVK board, which constructs power plants and airports, will meet within 10 days to approve the deal, the Economic Times reported on Friday, citing lenders and company officials who are part of the negotiations.

GVK Power Chief Financial Officer Issac George declined to comment on the report, when reached by Reuters. Hancock was not immediately available for comment.

Hancock and GVK Power last month extended the deadline for exclusive talks until end August, sources had told Reuters. The two companies, which have been in talks since February this year, had extended the deadline twice before.

Standard Chartered, India's second-largest lender ICICI Bank and Axis Bank will fund the GVK transaction, the report said, adding Ernst & Young was advising the Indian company.

Shares in GVK were trading up 0.6 percent at 16.60 rupees at 0446 GMT in a Mumbai market that was up 0.3 percent. The GVK stock is down more than half this year compared with a 21 percent fall in the main market.

Some analysts and bankers have expressed doubts whether GVK, which the market values at about $567 million, would be able to pull off such a large acquisition.

India holds 10 percent of the world's coal reserves, but local supplies are falling short of demand as the country builds more power plants, and as domestic coal projects run into environmental and land acquisition delays.

Indian energy firms have been scouting for coal assets overseas to feed power plants at home, and have been raising funds for potential overseas acquisitions and expanding facilities.

Copyright Reuters, 2010