The proposed merger between Sesa Goa and Sterlite Industries (India), aimed at creating a mega natural resources firm, on Monday moved a step ahead with both the Vedanta Group firms’ shareholders favouring the resolution.
While 91.7 per cent of the Sesa Goa shareholders present at the last week’s meeting in Goa voted for the merger, 92 per cent of Sterlite Industries’ shareholders approved the deal.
Sterlite Shareholders voted on June 21 in Tuticorin, Vedanta said in a release.
The merger scheme is on track for completion by the end of this year, it added.
The London Stock Exchange-listed Vedanta Resources had in February announced its plan to restructure its operations. It was planned that all its subsidiaries, except Konkola Copper Mines, would be merged into Sesa Goa and post-restructuring, a new entity, Sesa Sterlite, would be carved out.
The proposal has already received a few approvals that include the nod of the competition watchdog CCI. It would now require to get the approvals of High Courts of Bombay at Goa and Madras and the Foreign Investment Promotion Board (FIPB).
This is second restructuring exercise being attempted by Vedanta Resources as the first one in 2008 had failed due to objections raised by some minority shareholders over valuation of a group firm, Konkola Copper Mines.
The merger would create seventh largest natural resources company of the world (in terms of EBITDA) and a cost saving of Rs 1,000 crore annually, Vedanta had said earlier.
Post merger, Vedanta would hold 58.3 per cent stake in Sesa Sterlite. As per the scheme of arrangements, Sterlite shareholders would get three shares of Sesa Goa for every five shares held according to the swap ratio.
Cairn India, Hindustan Zinc, Balco, Vedanta Aluminium, Madras Aluminium, Talwandi Sabo Power and Australian Copper Mines will become subsidiaries of Sesa Sterlite after the restructuring.
The restructuring would lead to Vedanta’s debt burden falling by about 61 per cent to $ 3.8 billion. Besides, its debt service liability will come down to $180 million from current levels of $500 million.
However, Sesa Sterlite would end up with a total debt of about $14 billion.
Shares of Sesa Goa was trading 0.54 per cent up at Rs 186.90 on the BSE, while Sterlite Industries fell by 1.10 per cent to Rs 98.55.
