Cairn-Vedanta merger now by June 2016, says Group firm

Mining baron Anil Agarwal-led Vedanta Resources today said the merger of its subsidiaries Vedanta Ltd and cash-rich Cairn India will happen in June quarter of 2016 as against the first quarter stated previously.

In June, Vedanta Ltd had announced absorbing oil firm Cairn India in a USD 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, today 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 conference-call with reporters after announcing Vedanta Ltd's September quarter results, Vedanta Group's CEO Tom Albanese had said they have received a 'No Objection' from the stock exchanges -- BSE and NSE -- on September 10, 2015.

"The validity of Observation Letter is six months from September 10, 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 calender 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 USD 1.25 billion it had taken as inter-company loan couple of years back.

In 2011, Vedanta Group acquired 58.5 per cent controlling interest in Cairn India from its UK parent, Cairn Energy plc, 20 per cent of this was acquired by Vedanta Ltd and 38.5 per cent by Twinstar Mauritius Holdings Ltd (TMHL) - a special purpose vehicle wholly owned by Vedanta Resources plc (VED).

The acquisition by TMHL was funded by USD 4.43 billion of debt made up of bank debt sured by Cairn India shares and parent company guarantee/loan from VED. In August 2013, Vedanta Ltd acquired TMHL from VED.

Vedanta Ltd had in its July-September quarter earnings presentation stated that: "As on 30 Sep 2015, debt at Cairn acquisition SPV comprised Rs 9,204 crore of bank debt and Rs 17,167 crore of inter-company debt from Vedanta Resources Plc There was accrued interest payable of Rs 533 crore on the inter-company debt."

London-based Vedanta Resources had USD 7.7 billion debt as on March 31, 2015 while its Indian arm Vedanta Ltd had another USD 4.57 billion debt. Whereas Zero-debt Cairn India, on the other hand, has USD 2.85 billion cash reserve.