Lanco Infratech today said it has formally terminated the coal-supply pact with multinational Perdaman Industries, but has offered to reconsider the move, amid their about Rs 16,600 crore (3.5 billion (AUD) Australian dollars) legal battle in Australia.
Griffin Coal, which was acquired by Lanco for AUD 730 million in March, has terminated the coal-supply agreement (CSA) with Perdaman Chemicals and Fertilisers for the latter's upcoming Collie urea plant in Western Australia.
"We have terminated the coal supply pact with Perdaman (for its upcoming fertiliser plant) since the company failed to achieve financial closure for the plant," Lanco Infratech CEO (Business Development) Nagaprasad Kandimalla told PTI.
Lanco has offered to withdraw the formal termination and provide additional time till October 15 for Perdaman to meet the financial closure, he said.
"Griffin Coal has in good faith offered to withdraw this formal termination and to provide Perdaman with additional time until October 15, 2011 to achieve financial closure, including certain terms and conditions in line with the CSA," Lanco said in a statement.
This offer is open for acceptance only till September 6, it said.
Shares of Lanco soared nearly 6% to close at Rs 17.10 on the Bombay Stock Exchange.
As per the CSA, which was inked between Australia-based Griffin Coal and Perdaman Industries, the financial closure was to be achieved by August 29.
Kandimalla said Griffin Coal has the right to terminate the CSA if Perdaman failed to achieve financial closure. The pact was for an annual supply of about 2.7 million tonne of coal for the urea plant.
Perdaman officials were not immediately available for comments.
As per the contract with Griffin, coal is to be supplied to Collie urea project over a period of 25 years.
The latest development comes at a time when Perdaman Industries slapped a AUD 3.5 billion (about Rs 16,600 crore) lawsuit in May, against Lanco alleging non-compliance with coal supply pact, worth billions of American dollars.
When asked about the lawsuit, Kandimalla said the case is going on in the Australian court."We expect to hear the next course of action (related to the lawsuit) from the court in late September," he noted.
Lanco has maintained that claims made by Perdaman are baseless.
Perdaman Chemicals and Fertilisers, whose parent company is Perdaman Industries, filed the lawsuit against Lanco.
"Because of Lanco's conduct under the Australian Consumer Act, Perdaman is facing road blocks with regard to the works of the proposed $3.8 billion urea plant and have also suffered damages," Perdaman Chemicals and Fertilisers Pty Ltd CMD Vikas Rambal had said in June.
