In June, Vedanta Ltd had announced the absorption of oil firm Cairn India in a $2.3 billion all-share deal to create India's largest diversified natural resources firm
London: The Anil Agarwal-led Vedanta Resources plc. on Wednesday said the merger of its subsidiaries Vedanta Ltd and cash-rich Cairn India Ltd will happen in June quarter of 2016 as against the first quarter stated previously. In June, Vedanta Ltd had announced the absorption of oil firm Cairn India in a $2.3 billion all-share deal to create India’s largest diversified natural resources firm.
Announcing financial results for first half of 2015-16, Vedanta Resources—the parent firm of Vedanta Ltd, on Wednesday said, “We continue to work towards completion of the transaction by Q2 (April-June) 2016." While announcing the merger plans in June this year, Vedanta had said, “The transaction is expected to close in the first quarter of CY 2016."
Last month, in a concall with reporters after announcing Vedanta Ltd’s September quarter results, Vedanta Group’s chief executive officer Tom Albanese had said they have received a “no objection" from the BSE and NSE on 10 September 2015. “The validity of the observation letter is six months from 10 September 2015, within which the scheme of amalgamation is required to be submitted to the high court," he had said. Albanese told reporters that the merger “may happen sometime in the next calendar year." On minority investors in Cairn India, he said the matter could be put before shareholders for their nod as early as January next year.
Vedanta has offered one share for every share of Cairn India, a deal which did not appear lucrative to minority shareholders of the oil producer particularly its erstwhile promoter Cairn Energy plc. While the deal has been approved by the two stock exchanges, it is now awaiting a nod from the high court before it goes for a shareholder vote. Vedanta needs the deal to go through by March 2016 as otherwise it will have to repay $1.25 billion it had taken as inter-company loan couple of years back.
In 2011, Vedanta Group acquired 58.5% controlling interest in Cairn India from its UK parent, Cairn Energy plc, 20% of this was acquired by Vedanta Ltd and 38.5% by Twinstar Mauritius Holdings Ltd (TMHL)—a special purpose vehicle wholly owned by Vedanta Resources plc. The acquisition by TMHL was funded by $4.43 billion of debt made up of bank debt sured by Cairn India shares and parent company guarantee/loan from Vedanta.
In August 2013, Vedanta Ltd acquired TMHL from Vedanta. Vedanta Ltd had in its July-September quarter earnings presentation stated that “As on 30 September 2015, debt at Cairn acquisition SPV comprised ₹ 9,204 crore of bank debt and ₹ 17,167 crore of inter-company debt from Vedanta Resources Plc There was accrued interest payable of ₹ 533 crore on the inter-company debt." London-based Vedanta Resources had $7.7 billion debt as on 31 March 2015 while its Indian arm Vedanta Ltd had another $4.57 billion debt. Whereas Zero-debt Cairn India, on the other hand, has $2.85 billion cash reserve.
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