South Korea's SK Networks Co., the country's third largest conglomerate, is set to dramatically increase its holding stake in Australian mining company Cockatoo Coal to 40 per cent, a deal that just about saves the beleaguered Australian firm from a A$85 million loan it entered into late last year.

The acquisition, which is target to be completed within the first half of this year, is worth A$313 million or US$330.7 million, effectively jacks up the controlling ownership of SK Networks Co. from a mere 5.5 per cent to a whopping 40 per cent through a share placement of 53.5 cents each. Cockatoo Coal's current largest shareholder is Korean steelmaker Posco at 13.3 per cent. It also has Korea Electric Power as shareholder at 7.6 per cent.

Under existing takeover laws mandated in Australia, a bid for more than 20 per cent of a listed corporation corresponds to a full takeover.

SK Networks Co. has promised it will not elevate to more than 40 per cent its stake ownership in Cockatoo Coal at least for the next four years, "except in limited circumstances," www.skynews.com.au reported.

In December 2011, Cockatoo Coal rushed into an A$85 million bridging loan with Macquarie and Credit Suisse to pay off a A$65 million loan facility with Korea Exchange Bank, due to mature on Dec. 30 last year.

Cockatoo Coal was forced to resort to the aid assistance from Macquarie and Credit Suisse, albeit at a high interest rate, after buyout talks with another Korean shareholder failed at the very last minute.

However, the much needed A$313 million or US$330.7 million cash boost is still unbinding, it still being subject to due diligence by SK Networks Co. In the event the parties fail to sign and enter into a binding deal by April 30, the placement will not push through.

SK Networks Co. has secured 2 million tonnes of coal annually through its mining interested in Australia and China. With Cockatoo expected to generate 3 million tonnes in 2015 and 12 million tonnes in 2019, the takeover bid will enable the conglomerate help South Korea to have a stable and self-sufficient energy rate. The country relies 100 per cent on coal imports to fuel its energy requirements.

Cockatoo unearths coal from 13 mines in Queensland and New South Wales, which are estimated to hold 1.5 billion tonnes of coal, 15 times larger than the annual 100 million tonnes that Korea imports.