Fuelling the deal

What goes on behind the scenes of a multimillion-dollar deal and how do you ensure there are no hidden legal landmines?

Raghavendra Verma talks to the lawyers behind Essar’s acquisition of Trinity Coal to find out

The US$600 million purchase of West Virginia-based Trinity Coal Corporation by the Essar Group is yet another example of the growing global ambitions of Indian businesses. More so, as Essar intends to use half the coal from its new acquisition to fuel its steel plant in Canada. Given the recent failures of Indian energy companies to acquire assets abroad, this deal is being seen as a major coup.

Gokul Chaudhri, partner and leader of the energy and infrastructure practice at BMR Advisors in New Delhi, told India Business Law Journal, “We are seeing a shift in the type of companies that are going out [to acquire overseas assets]”. These companies are now “learning the game and learning how to win”, he adds.

Explaining why past attempts by government companies to buy assets overseas failed, Chaudhri says, “one reason was the influence of Chinese companies who were looking at the same transactions and were far more aggressive, nimble and savvy than the Indian public sector enterprises”.

Essar negotiated this purchase with Trinity’s management as well as Denham Capital, a private equity firm which had been a major shareholder since January 2005.