India's Bhushan acquires 64pc stake in Bowen EnergySarah-Jane...

India's Bhushan acquires 64pc stake in Bowen Energy

Sarah-Jane Tasker | September 13, 2008

INDIAN steel giant Bhushan has increased its holding in Queensland junior coal hopeful Bowen Energy, as it heads towards 64 per cent control of the Australian-based company.

Bowen announced yesterday that Bhushan had paid $560,000 to take its holding to 19.91 per cent and that the two companies had also entered into an agreement for Bhushan to subscribe to 100 million of Bowen shares for $32 million.

The first 50 million share purchase, which will take Bhushan's interest to 50.5 per cent, will be voted on at Bowen's AGM in November.

Managing director Kevin Nichol said he was confident it would gain full support.

He said the remaining 50 million shares, valued at $16million, would be sought over the next 18 months and the funds paid in four tranches during that period, taking Bhushan's final stake to around 64 per cent at the end of the process.

"It is the best option any small company in our space could have. Bhushan will control the company and the board at shareholder level, closing the door to other end users, but opening the door for other institutional investors," Mr Nichol said.

Bowen's stock jumped 13 per cent yesterday, ending the week at 30c.

Bhushan, India's third largest speciality steel products producer, does not need approval from the Foreign Investment Review Board because the junior player has a market cap of less than $50 million.

Federal Treasurer Wayne Swan's stance on foreign investment in Australia's vibrant resources sector has been a hot topic in the industry this year, with the giant steel players of China and India keen to increase stakes in a list of producers.

Queensland Premier Anna Bligh is open to foreign interest in her state and visited the Indian steelmakers this year to encourage further investment in Queensland's minerals and exploration and mining industries.

"My meeting with the chairman of Bhushan was to see what could be done to facilitate further investment and to offer my Government's assistance," Ms Bligh said in April.

Mr Nichol said Bhushan had just spent $US3 billion on two new steel mills in India and in the next six months would need up to $US1 billion worth of coal to feed its mills.