core sector communique

Adanis acquire Australian coal port for Rs 9,000 cr

Mundra Port and SEZ Ltd (MPSEZL), the port arm of infrastructure conglomerate and group flagship company Adani Enterprises Ltd (AEL), on Tuesday announced its foray overseas with the acquisition of Abbot Point Coal Terminal (APCT), an Australian port, for $2 billion, or nearly Rs 9,000 crore.

The deal takes MPSEZL to among the top port companies in the world with its asset base of $100 million increasing to over $3 billion. From a 2.5 MTPA (million tonnes per annum) port in 2001, MPSEZL's cargo handling capacity has now risen to over 200 MTPA

The sale-and-purchase agreement was signed in Brisbane, Australia, between MPSEZL Director Mr Rajeeva Sinha and officials of the State of Queensland. It is the largest acquisition by any Indian company abroad in this sector.

The deal size is also one of the largest amongst all port acquisitions in the world, making the Adani Group the largest Indian investor in Australia, said Mr B. Ravi, Chief Financial Officer, here.

The all-cash deal will be duly funded by an acquisition debt. “The asset base at Abbot Point allows us to take out finance at the assets-level very soon,” Mr Ravi said. MPSEZL has formed a subsidiary for this port, Mundra Port Pty Ltd.

Abbot Point, which commenced operations in 1984, is a profit-making port with take-or-pay arrangement for its entire 50 MTPA capacity; it currently handles 20 MTPA of coal. The fully-mechanised port is equipped with high-end ship loaders, stacker re-claimers, conveyors and rail systems.

All-cash deal

About 25 per cent of the amount involved is expected to be in the form of equity issue in the next 3-4 months from internal accruals while the balance would be through a short-term mezzanine debt. Having achieved full financial closure, the Adanis will take over APCT on June 1 and go in for the debt thereafter.

With capacity to handle 50 MTPA of coal from its existing two fully-mechanised berths at APCT, the current revenue of A$100 million is expected to go up to A$305 million when the company expands to add two more berths to reach 80 MTPA capacity in the next three years.

The demand in the region is about 100 MTPA, apart from the Adanis' Galilee cargo, making it a sound commercial proposition for the Group. During this period, EBIDTA is expected to increase from 54 per cent (A$60 million) to 74 per cent (A$213 million).

As of now, the Adanis will only be the landlords of the port which will continue to be run by the existing operator, Xtrata, for the five-year concession period. Thereafter, the Adanis could begin operating APCT, Mr Ravi said.

At present, the entire capacity of 50 MTPA is fully booked by nine customers. In the near-term, however, the Adanis, who have coal interests in Australia, could also join the user base.