Panaji: Shareholders of iron ore miner Sesa Goa cast votes here on Tuesday on the proposed merger of Sterlite Industries and other group companies of Vedanta Resources with itself and the result will be known on June 25.
The merger, which is aimed at simplifying the Vedanta group's structure and cutting costs, requires approval of 75 percent or more shareholders to become effective.
A senior company official said that some shareholders posed tough questions to Sesa Goa Board at the extra-ordinary general body meeting.
"The questions were largely on most of Vedanta's debt burden, estimated at USD 9 billion, being passed on to the new entity, Sesa Sterlite. Questions on valuations and operations of Vedanta Aluminium were also raised," the official said.
A company spokesperson declined to comment on the deliberations held on Tuesday.
A similar exercise will be executed by shareholders of Sterlite Industries on June 21 in Tuticorin, Tamil Nadu, to approved its merger into Sesa Goa.
However, shares of both the group firms were down in the late afternoon trade on the buzz that the restructuring will not go through. While Sesa Goa shares were trading down 3.01 percent at Rs 177 apiece on the BSE, Sterlite scrip was down 1.98 percent at Rs 94 at 1500 hours.
On February 25, London Stock Exchange-listed Vedanta Resources had announced to restructure its operations. As per this, Vedanta's all subsidiaries, except Konkola Copper Mines, will be merged into Sesa Goa and post-restructuring, a new entity, Sesa Sterlite, will be carved out.
The restructuring, if approved, will lead to Vedanta’s debt burden falling by about 61 percent to USD 3.8 billion. Besides, its debt service liability will come down to USD 180 million from current levels of USD 500 million.
However, Sesa Sterlite would end up with a total debt of about USD 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 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.
Post merger, Vedanta will hold 58.3 percent 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.
First Published: Tuesday, June 19, 2012, 15:56