Bhushan Steel acquires 15% in Australian co for coal supply

Mumbai: Bhushan Steel on Wednesday said it will acquire a 15% stake in Australia-based Bowen Energy (BWN) to source coal for its Orissa plant. “In order to ensure regular supply of coal, the management decided to take 15% stake in the Bowen Energy, and has signed an MOU to this effect,” Bhushan Steel said in a communique to the Bombay Stock Exchange.

This is a step towards vendor development and ensuring regular supply of one of the major inputs for the manufacture of steel, Bhushan Steel added.

The MoU aims to create a strategic partnership whereby Bhushan Steel is seeking long-term supply of quality Australian coal for its expanding steel making operations across Asia. BSL and BWN have agreed to enter into a Security Subscription Agreement, through which BSL will subscribe to 10 million new ordinary shares in BWN for $3.2 million, as per the information available on the BWN website. BWN further said it would issue BSL 2.5 million options and 14 million unlisted options free of cost in consideration of a 15% stake in the company.

Both the companies are expected to complete the requisite due diligence and enter into the Security Subscription Agreement within four to six weeks’ time, BWN added. The successful completion of the agreement would provide BWN with opportunities to capitalise on Bhushan Steel’s raw material needs besides contributing to its ongoing working capital and future development funding requirements.