Decks cleared for Sesa Goa-Sterlite merger with Bombay HC nod

The Sesa Goa-Sterlite merger, announced in February 2012, has received all other regulatory clearances.

Updated: Aug 12, 2013, 23:15 PM IST

New Delhi: The decks have been cleared for the much-delayed merger between Vedanta group companies Sesa Goa and Sterlite Industries, with final regulatory clearance received in the form of approval from the Bombay High Court.

A division bench of the court at Goa Monday gave its nod for the merger and rejected a review petition filed by a shareholder challenging the earlier approval granted by a single bench, Sesa Goa said in a statement.

The Sesa Goa-Sterlite merger, announced in February 2012, has received all other regulatory clearances.

"The Division Bench of the High Court of Bombay at Goa vide its order dated August 12, 2013, has dismissed the appeal filed by a shareholder of Sesa Goa Ltd and sanctioned the scheme of amalgamation and arrangement amongst Sterlite Industries (India) Ltd...And Sesa Goa Ltd and their respective Shareholders and Creditors...," Sesa Goa said.

Vedanta's Chief Financial Officer D D Jalan had said last month that chances of a further delay in completing the merger would be remote once the court's approval is received. The decision, however, can be challenged in the Supreme Court.

The merger is aimed at creating a mega Indian natural resources giant. It is expected to be the seventh-largest global diversified natural resources major by EBITDA, Vedanta had said in a statement on February 25, 2012.

As per the scheme, Sesa Goa and Sterlite Industries will merge to create a new entity, Sesa Sterlite. Vedanta will hold 58.3 percent in Sesa Sterlite, and the group's 79.4 percent shareholding in Konkola Copper Mines Plc will continue to be directly held by Vedanta.

All other group entities will be controlled by Sesa Sterlite.

After creation, Sesa Sterlite will have total assets worth USD 36 billion (Rs 1,95,000 crore), net income of USD 1.9 billion (Rs 10,000 crore) and cash and liquid investments of USD 7.7 billion (Rs 42,000 crore).

It will also inherit almost 87 percent of Vedanta's debt, which was USD 16.593 billion in March 2013, as loans taken to fund the Cairn India acquisition get transferred to Sesa Sterlite. Accordingly, Sesa Sterlite will have a debt of USD 14.399 billion.

The merger will result in a Rs 1,000 crore annual saving for Vedanta through a reduction in debt-servicing cost.

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, Western Clusters in Liberia, Talwandi Sabo Power and Australian Copper Mines will become subsidiaries of Sesa Sterlite after the restructuring.