Merger of Cairn India into Vedanta to strengthen both cos: Tom

Absorption of cash-rich oil arm Cairn India in Vedanta will strengthen the country's largest diversified natural resources giant and benefit both firms, Vedanta Chief Executive Officer Tom Albanese said today.
"I do believe merger will strengthen and consolidate asset base of Vedanta Resources to benefit the shareholders of both companies," Albanese said during a conference call after the second quarter earnings of Vedanta Ltd.
On minority investors in Cairn India, he said the matter could be put before shareholders for their nod as early as January next year.
Albanese said, "The company has received a 'No Objection' from the stock exchanges on September 10, 2015. The validity of the 'Observation Letter' is six months from September 10, 2015, within which the Scheme of Amalgamation is required to be submitted to the Honourable High Court."

He said merger may happen sometime in next calendar year.
On Vedanta sweetening offer to Carin India minority shareholders, he said the company at present is not considering any such plan.

"We do not want to comment on any speculation," he said.
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 June, India's largest private miner Vedanta Ltd had announced it will absorb oil firm Cairn India in a USD 2.3 billion all-share deal to create the country's largest diversified natural resources firm.
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 a debt of USD 7.7 billion as on March 31, 2015 while its Indian arm Vedanta Ltd had another USD 4.57 billion debt. While Zero-debt Cairn India, on the other hand, has USD 2.85 billion cash reserve.