Lanco Said to Consider Sale of Australian Griffin Coal Division

Lanco Infratech Ltd. (LANCI), India’s second-biggest private power producer, is considering selling its Australian unit Griffin Coal Mining Co. to help repay debt, three people with knowledge of the matter said.

Lanco is examining options including a full sale of Griffin Coal, which it bought for A$750 million ($665 million) in 2011, said two of the people, asking not to be identified as the deliberations are private. The company is also in advanced talks to divest a hydroelectric power plant in India, two people familiar with the matter said, without naming a buyer.

Lanco is seeking to sell the unprofitable Griffin Coal unit after agreeing with banks to restructure debt that ballooned to 339 billion rupees ($5.5 billion) in September. It is among foreign companies whose coal acquisitions in Australia have soured as prices for the fuel fell for three straight years.

Nagaprasad Kandimalla, who ran Griffin Coal, said today in a phone interview that he quit to join a political party, without elaborating. He declined to comment on Lanco’s plans to sell the unit.

Power-station coal prices at Australia’s Newcastle port, an Asian benchmark, fell 1 percent to $85.41 a metric ton for the week ended Jan. 3, according to data from GlobalCOAL. Prices slid 6.5 percent in 2013, the third year of declines.

A. Narasimhan, a Lanco spokesman, declined to comment. The company’s shares have slumped 44 percent in the past year while India’s BSE Sensex Index advanced 5.2 percent.

Griffin Loss

Griffin Coal’s loss before interest, tax, depreciation and amortization almost doubled in the fiscal year through March 2013 to 1.05 billion rupees, Lanco said in May without giving a reason. Its mines in Western Australia’s Collie Basin produce 4 million tons of coal a year, and Lanco plans to boost output to 18 million tons by fiscal 2018, according an August presentation.

Lanco approved a debt restructuring proposal from its banks, according to a December exchange filing that didn’t include details of the plan. Its lenders include State Bank of India and ICICI Bank Ltd., according to Lanco’s latest annual report. Lanco’s debt has swelled more than fourfold since March 2010, data compiled by Bloomberg show.

The company runs a 70-megawatt hydropower plant in Himachal Pradesh, North India, according to its website. Philip Chacko, then director of investor relations at Lanco, said in January 2012 that the company was seeking to raise as much as $750 million by selling a stake in its power business to private-equity investors.

Lanco plans to sell stakes in other power projects besides the hydropower facility, two of the people said.

To contact the reporters on this story: George Smith Alexander in Mumbai at galexander11@bloomberg.net; Brett Foley in Melbourne at bfoley8@bloomberg.net; Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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