The WA reported that India's biggest private power producer plans to sell a stake in Griffin Coal in a bid to slash its mounting debt load, a move which could pave the way for an expansion of its Collie coal mine.

Lanco Infratech chairman Mr L Madhusudhan Rao made the comments after the company's annual meeting as part of its bid to pare back its debt to equity levels to a more sustainable, but still high, 4:1 ratio.

He said “We are looking at raising USD750 million as equity for thermal, coal and hydro electric power projects. If we bring this (money) in, it is going to bring back the debt equity situation at par with any other peer companies."

But in an admission of its struggles in Collie, Mr Rao separately said Lanco was "not averse" to selling a majority stake in Griffin to help fund its expansion, less than two years after taking control of the WA company.

Lanco bought Ric Stowe's debt laden Griffin Coal empire for AUD 750 million in late 2010, but has been struggling to bed down the purchase amid its own ambitious debt-funded expansion program in India, as well as difficulties in reviving Mr Stowe's former Collie-based mine.

It supplies the Bluewaters power station in Collie and has ambitious plans to expand the Griffin mine's annual output from 4 million tonnes to up to 20 million tonne. However, it faces a minimum AUD 1.2 billion bill to build new rail links and a berth at Bunbury, prompting the fresh think on an equity injection.

Source - thewest.com.au

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