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ELP, Blake Dawson command Adani $2bn Australian coal port sortie

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Exclusive: Economic Laws Practice (ELP) and Australian firm Blake Dawson have advised Adani Enterprises-owned Mundra Port and Special Economic Zone Limited (MPSEZ) on its acquisition of Australia’s Abbot Point coal terminal for $2bn.

ELP partners Sujjain Talwar and Vikram Nankani along with associate manager Aakanksha Joshi led for MPSEZ, which had drafted in Australian firm Blake Dawson as legal counsels.

Australian firm Arthur Robinson advised Abbot Point.

MPSEZ, which is India’s largest private port and special economic zone, was awarded the bid by the State of Queensland on a 99-year old lease basis involving also certain infrastructure facilities and existing user contracts.

The coal terminal of two berths will be used by Adani for shipping coal from an Australian mine acquired by the company last year.

The transaction is set to complete next month and was signed yesterday in Brisbane, marking Adani Group’s foray into the international port sector.

Talwar said that the deal took place quickly, taking around six weeks from start to finish. “Working on ports internationally is just a big part of our DNA,” he said, adding that right since ELP started he had been active on port projects.

He explained that ports deals were challenging and involved “delicate negotiation”. A main challenge revolved around securing financing, he said, because particularly in green field ports the investment was huge and shipping companies normally did not enter into huge off-take contracts. “Therefore getting the best possible from the government on a concession basis so you can manage on that time becomes key.”

The second major issue was that one had to be careful to ensure that no competition rules were encroached: “You have to delicately balance it that you are not seen to be giving preference to any one shipping line.”

Third, getting all the contracts in place with companies such as crane producers, of whom there were only two or three companies globally, was also challenging according to Talwar.

“The deal is partly funded through an acquisition debt and a small portion of equity from MPSEZ. The balance sheet size of the company will be more than double post acquisition. The revenue from the port operations are expected to nearly triple to A$305 million (Rs 1,470 crore approx.) by 2016 from A$110 million (Rs 530 crore approx.), estimated for 2011. The EBITDA margins are also believed to rise from the current 54 per cent to about 70 per cent after the expansions at the port in the next five years,” reported VCCircle.

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