Tips and rumours

Jul 25, 2014

Tips and rumours

Rinehart sweats on $500 million repayment ... holidays now science-free ... when is a cigar not a cigar?

From the Crikey grapevine, the latest tips and rumours …

Debt repayment worries. Although it now looks pretty unlikely that mining mogul Gina Rinehart will be taking over Fairfax Media, she must still be sweating on the September 16 deadline for her partner in the Galilee Basin, India's GVK, to come up with the final US$560 million tranche payment it owes on the purchase of the Kevin's Corner and Alpha Coal projects. GVK has made the first two payments due to Rinehart's Hancock Prospecting under the US$1.26 billion deal, struck three years ago, but is struggling financially with some US$3.3 billion in debt. That's a lot for a company with a market capitalisation of just US$400 million, as Tim Buckley from the Institute for Energy Economics and Financial Analysis noted here yesterday.

How on earth is GVK going to come up with another half-billion dollars? And if GVK defaults it won't be easy for Rinehart, a keen litigant, to secure payment: GVK's Australian shelf company is owned by an indebted Singaporean entity, and Hancock would have to go through Australian and Singaporean courts before it could recover from the Indian parent. Surely the most likely outcome is an extension -- perhaps accompanied by a modest down payment -- and a hope that dire thermal coal markets recover, pronto. A shot in the arm came this week with backing for the GVK project from coal haulier Aurizon's Lance Hockridge, so now GVK just has to stay solvent.

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3 thoughts on “Tips and rumours

  1. Vincent O'Donnell

    Equally interesting question is whether Ross and John will enjoy a glass of wine with their meals on the long flight?

  2. Jill Baird

    I think a lot of people will boycott Royal Brunei – they don’t serve alcohol.

  3. AR

    ..sooo, those postprandial ‘cigars’that Leventy & the Kormannator were smoking?

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