Vedanta-Cairn India merger: Revised and final terms announced

Mumbai, July 22 (IANS) Oil and gas major Cairn India along with its parent London-listed Vedanta Resources on Friday announced the revised and final terms of their proposed merger in a filing made to the stock exchange.

“Vedanta Ltd, Cairn India Ltd and Vedanta Resources plc today (Friday) announced revised and final terms to the recommended merger between Vedanta Ltd and Cairn India, that was announced on 14 June 2015,” a press statement here said.

“Pursuant to the revised and final terms, each Cairn India minority shareholder will receive, for each equity share held, 1 equity share in Vedanta, 4 Redeemable Preference shares with a face value of Rs 10 in Vedanta, with a coupon of 7.5 per cent and tenure of 18 months from issuance.

“Implied premium of 20 per cent to one month VWAP (volume weighted average price) of Cairn India share price,” it added.

The development comes at a time key shareholder state-run Life Insurance Corporation (LIC), is yet to give its assent to the merger.

As the single largest domestic minority shareholder, LIC owns 9.06 per cent in Cairn India and 3.9 per cent stake in Vedanta.

Commenting on the development, Chairman Vedanta Resources Anil Agarwal said: “The simplified corporate structure will better align interests between all shareholders for the creation of long term sustainable value.”

“Your company continues to work towards completion of merger with Vedanta,” Cairn India chairman Navin Agarwal told shareholders at the company’s 10th annual general meeting here on Thursday.

“Your company will get access to Vedanta’s tier-one metal and mining assets, which are well-invested, low cost and have a long life,” he said.

Natural resources firm Vedanta received approvals last September from both the Bombay Stock Exchange and the NSE on the company’s proposal to merge with its hydrocarbons subsidiary Cairn India.

Merging Cairn India with itself would provide Vedanta access to the oil explorer’s cash and help reduce its debt burden. Vedanta took majority control of Cairn India for $8.67 billion in 2011 and holds 59.9 percent in the latter through its various units.

“We will continue to invest in our existing assets to increase production and maximize economic recovery. I remain confident that your company will play a pivotal role in India’s quest for energy security,” said Cairn India’s fiscal 2016 annual report, quoting chairman Navin Agarwal.

Cairn’s polymer flood projects at Mangala continued to yield positive results and contributed an average of 14,000 barrels of oil equivalent per day during the year, the report said.

Amid the low global oil price environment, Cairn India has focused on optimising costs, building talent and capabilities and keeping employees focussed on goals and priorities of the organisation, enabling the company to generate free cash flow over $637 million, it added.

Despite steep drop in crude oil prices, Cairn India adhered to its stated dividend policy with a pay-out amounts to 31.6 per cent of the company’s annual consolidated normalized net profit, the chairman said.

Meanwhile, Cairn India on Thursday reported 28 per cent fall in its net profit for the first quarter ended June caused by fall in global oil prices.

The company’s net profit in April-June was at Rs 360 crore, as compared to Rs 501 crore in the same period a year ago, Cairn said in a statement here.



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