Shareholders of iron ore miner Sesa Goa have approved of the Sesa-Sterlite merger, against analysts expectation of some opposition. Shares of Sesa Goa reacted to this news and were up 1.26 per cent to Rs 188.25.
On February 25, London Stock Exchange-listed Vedanta Resources (parent company of Sesa-Sterlite) had announced to restructure its operations. As per this, all of Vedanta's subsidiaries, except Konkola Copper Mines, will be merged into Sesa Goa and post-restructuring, a new entity, Sesa Sterlite, will be carved out.
Post merger, Vedanta will hold 58.3 per cent stake in Sesa-Sterlite. As per the scheme of arrangements, Sterlite shareholders will 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.
According to analysts, the restructuring will 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. 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.
This is second restructuring exercise being attempted by the Vedanta Resources which has yielded results, as its first attempt in 2008 had failed due to objections raised by some minority shareholders over valuation of a group firm, Konkola Copper Mines.