BackCairn India merger: Vedanta to seek creditors nod on 8 September
Vedanta has called meetings with its both secured and unsecured creditors on same date in Goa to seek their approval for the merger
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New Delhi: Mining giant Vedanta will hold a meeting of its creditors on 8 September in Goa to seek their approval for the merger of Cairn India with it under a revised all-share deal.
Vedanta has called meetings with its both secured and unsecured creditors on same date in Goa to seek their approval for the merger. It has already scheduled a meeting of equity shareholders on the same day in Goa for approval of the merger. The high court of Bombay at Goa on 18 December, 2015 and 22 July, 2016, had directed the firm to convene a meeting of secured and unsecured creditors of Vedanta on 8 September, or immediately after the meeting of the company’s secured creditors, Vedanta said in separate regulatory filings. The orders of the high court are over the proposed merger of Cairn India with Vedanta Ltd, it added.
Pursuant to the orders, the company will seek approval of its secured and unsecured creditors for the proposed scheme of Cairn India with Vedanta Ltd, the filings said. On Thursday, Cairn India said it has called a shareholders’ meeting on 12 September to seek approval for its takeover by parent firm Vedanta Ltd under a revised all-share deal.
In a bid to salvage the merger of cash-rich oil firm Cairn India with its debt-laden parent Vedanta, billionaire Anil Agarwal-led group had last month sweetened the deal by offering three additional preference shares in hope of winning over minority shareholders like LIC. Through the merger, Agarwal is looking to create India’s largest diversified natural resources firm, which could compete with BHP Billiton and Vale SA. In the revised offer, Vedanta will give minority shareholders of Cairn India one equity share and four redeemable-preference shares with a face value of ₹ 10 each. The preference shares will carry a coupon of 7.5% and tenure of 18 months.
Vedanta is said to be wanting to use ₹ 23,290 crore cash lying with Cairn to pay off part of its ₹ 77,952 crore debt. It had in May rolled over a controversial $1.25-billion loan taken from Cairn India in July 2014. For the merger to go through, half of the minority shareholders, who together make up for 40% of the Cairn equity, have to approve the deal.
State-owned LIC holds 9.06% in Cairn India while the company’s former promoter Cairn Energy Plc of the UK has 9.82% interest. The deal will go through if LIC votes in favour of the deal, a person familiar with the matter said.
Post-merger, London-listed parent Vedanta Resources Plc’s holding in Vedanta will drop to 50.1% from 62.9%. Cairn India’s minority shareholders will own 20.2% and Vedanta minority shareholders 29.7% in the merged entity. In June last year, Vedanta had offered shareholders of Cairn India one ordinary share and 7.5% redeemable preference share with a face value of ₹ 10 each.
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