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SEP 08 2016

Vedanta EGM today to seek Cairn deal approval

  • Economic Times, ET Bureau / Hyderabad
  • Created: Thu 08th SEP 2016

 

Shareholders of Anil Agarwal’s Vedanta Ltd are to convene in Goa on Thursday for an extraordinary general meeting (EGM), to discuss the proposed absorption of Cairn India.

“It is going to be a closed-door meeting with Vedanta's legal team, along with investor relations and other top officials,” a spokesperson told this newspaper.

On Tuesday, shareholders of London-based Vedanta Resources Plc had approved the merger between Vedanta Ltd and group company Cairn India. With this, the metals and mining company’s plan of merging the oil subsidiary with itself is beginning to gather pace.

The deal has been stuck after key minority shareholders Life Insurance Corporation of India (LIC) and Cairn Plc (which held residual stake after Cairn India’s sale to the Vedanta group) refused to give their assent to the deal, following the initial merger announcement in June last year. At least half the minority shareholders of Cairn India have to approve the proposal for the deal to pass through.  To sweeten the deal, Vedanta had revised the offer last month and agreed to give minority shareholders of Cairn

India one equity share and four redeemable preference shares with a face value of Rs 10 each. The latter will carry a coupon of 7.5 per cent and tenure of 18 months. Earlier, Vedanta had offered one share each in Vedanta, with one preference share, for every share held in Cairn India.

While Vedanta Resources’ shareholders have given their nod for the deal, sources said LIC has not yet done so. An LIC official said they’d yet to decide. In July, too, when reports suggested the insurance behemoth had approved the deal, LIC clarified no approval had yet been given by them. An e-mail to LIC did not elicit any response. LIC and Cairn Plc hold about nine per cent each in the oil company.

Meanwhile, Cairn India has already announced that it will be holding an EGM on Monday in Mumbai. These meetings will be watched closely by the Street.

Through this merger, Agarwal is looking to create India's largest diversified natural resources firm, which could compete with the likes of BHP Billiton and Vale SA. Also, this merger is expected to give Vedanta a needed access to the cash of Rs 23,290 crore with Cairn India, to pay part of its Rs 77,952 crore debt.

 

Tags

Goa Goa Cairn India Oil Vedanta BHP Billiton Mumbai India

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