The fate of embattled coal miner Gujarat NRE is set to be decided today, with shareholders voting at 2pm on whether to allow Jindal Steel and Power to become the new owner of the company.
Hundreds of workers affected by Gujarat’s cash flow problems are expected to be at the meeting where a vote will determine if Jindal is to become Gujarat’s majority shareholder.
300 workers for the company have not been paid wages owed to them for over four weeks, with Gujarat previously telling employees cash flows should improve after the shareholder meeting.
However, it remains unclear whether the deal will help to save the miners’ jobs or guarantee that their owed wages will be paid.
"The union told us that Jindal would be very interested in cutting costs, so we don't exactly know what will happen, but it's better than the other option, which would see [Gujarat] taken into administration,” one mine worker said.
A report by BDP Corporate Finance published on the ASX said the deal to allow Jindal to acquire 52 per cent of Gujarat was “not fair but reasonable”, going to say that if the deal did not go ahead, the miner would be unlikely to find another source of funding.
‘‘If the transaction does not proceed, Gujarat will not be able to achieve its objectives of the expansion plans for its projects and it will have to immediately repay all monies owing to the Jindal Group and bank debts that are maturing as it is unlikely to be able to refinance these bank debts without obtaining alternative funding,’’ the report said.
A vote in favour would see $68.8 million in new capital flow into the company, however Gujarat would then need to repay Jindal around $46.6 million, and $2.5 million in other bonds.
This leaves $18.7 million to pay other employees ages and superannuation.
A vote in favour of the deal would see the resignation of Gujarat directors Andrew Firek and Maurice Anghie with Jindal expected to appoint their own directors.
Jindal would also have the right to nominate a new CFO.