Anil Agarwal promoted firm Vedanta Resources on Friday said it planned to raise up to $1.5 billion through private placement of bonds to part-finance its $9.4 billion acquisition of Cairn India.
The company would also launch a global road show from May 23 for the bond placement, which may be offered in one or more tranches, Vedanta said in a filing to the London Stock Exchange.
“Vedanta expects to use the proceeds of the offering for, among other things, to finance a portion of the purchase price for the acquisition and to pay related fees and expenses.
“This will result in a cancellation of commitments under a bridge facility for a total aggregate amount of up to $1.5 billion,” the company's filing said.
The company has appointed Barclays Capital, Citigroup, Credit Suisse, Royal Bank of Scotland and Standard Chartered Bank as joint global coordinators, joint lead managers and joint book runners, while Goldman Sachs International and Morgan Stanley have been hired as joint book runners for the bond issue.
It has also appointed UniCredit Capital Markets LLC as co-manager for the proposed private deal.
On Thursday, Edinburgh-based Cairn Energy plc had extended the deadline by an unknown period for closing the deal in order to enable Vedanta secure the necessary Indian government approvals. April 15 was the original deadline for closing the transaction and later it was extended to May 20 by the two firms.
The Group of Ministers is scheduled to meet on May 27 to consider the deal but it is unclear if the panel would require more than one meeting to vet the proposal, after which it has to go back to the Cabinet Committee on Economic Affairs (CCEA), the final approval authority in this case.
The ministerial panel would deliberate on whether Vedanta, with no experience in oil and gas sector, should be given unconditional approval for buying a company that owns the nation's largest onland oil fields or given clearance after attaching reasonable conditions.
Oil and Natural Gas Corporation (ONGC) has a 30 per cent stake in Cairn India's mainstay Rajasthan oilfields, but it is liable to pay royalty not just on its share, but also on Cairn's 70 per cent share of crude oil from the field.
ONGC has been demanding that royalty payment should be added to the project cost, which can be recovered from the sale of oil before profits are split between the partners and the government.
