The GVK Group on Friday announced that it had firmed up arrangements to acquire Hancock Coal and Infrastructure projects of Australia at a cost of $1.26 billion to be paid in a phased manner with $500 million payable no at closure.

The coal project of Hancock comprises a 7.9 billion tonne mine compliant with Australia's Joint Ore Reserves Committee resource categorisation with 3.3 billion tonnes reserves and a potential for more tonnage.

Accordingly, a shareholding up to 79 per cent in the Alpha (‘Tad's Corner') and Alpha West (‘Paul's Corner') coal projects located in the Galilee Basin in Queensland and 100 per cent holdings in Kevin's Corner Coal Project and in the rail and port project connecting the said coal projects to the port of Abbot Point and Abbot Point T3 expansion project, has been acquired.

A press release said the strategic moves were made through the GVK Coal Developments (Singapore), a step-down subsidiary of GVK Natural Resources in a joint venture with GVK Power and Infrastructure entering into various acquisition documents with Hancock Prospecting and some of its affiliated entities. The projects acquired together were one of the largest coal development ventures in the world. The coal project apart, the infrastructure project involved development, ownership and operation of an integrated infrastructure development consisting of a 495-km rail line and a 60 million tonnes annually of high quality thermal coal. At full production, the three coal projects are expected to supply about 84 million tonnes annually to the global sea-borne coal market. The first phase of production, expected to start in 2014, envisages a total production of over 30 million tonnes annually of high quality thermal coal.

The acquisition cost is proposed to be funded by loan availed by GVK Coal Developers (Singapore) Pte Ltd. From banks. The security for this loan comprises the assets of the acquisition target companies and security provided by GVK Natural Resources Pvt. Ltd. And GVK Power and Infrastructure Ltd. GVK Natural Resources will provide a guarantee to the extent of 51 per cent of the outstanding facility amount subject to applicable RBI regulation. GVK Power would provide a corporate guarantee to the extent of 49 per cent of the outstanding facility amount, says the release.