Private oil and gas explorer Cairn India on Monday received a go-ahead from its shareholders for merger of the firm with parent Vedanta. The development brings London-based billionaire Anil Agarwal closer to the merger of the hydrocarbon exploration company with its cash-starved parent Vedanta.
“Of the members present and validly voting, 65.41% in number, representing 92.86% in value, voted in favour of the resolution approving the scheme,” Cairn India said a statement to the Bombay Stock Exchange.
It added that the scheme has also approved a majority of the minority shareholders. The public shareholders of the company have casted 72.43% of votes (in value) in favour of the resolution.
The merger would now need to be approved by the High Courts and vetted by regulatory bodies including petroleum ministry. Last week, the shareholders of Vedanta have approved the proposal of its merger with it Cairn India.
Navin Agarwal, chairman of Cairn India said in a statement on Monday that he is confident that the financial strength and diversified portfolio of tier-I assets of the merged company, with strong growth potential, will provide de-risked earnings and stable cash flows and drive long-term value.
Currently, minority shareholders hold 40.12% in Cairn India. This includes 9.83% by its erstwhile parent Cairn UK Holdings and another 9.06% by LIC of India, while foreign portfolio investors hold 15.75%, mutual funds and insurance companies have nearly 1% , and retail investors about 3.5%.
Vedanta sweetened the offer in order to win over the minority shareholders. In the revised offer, oil and gas explorer Cairn India’s minority investors will receive one equity share and four redeemable preference shares of Vedanta for each Cairn India share they hold. This is in contrast to the June 2015 offer where one equity share and one preference share were offered.
While the 1:1 merger ratio is unchanged, Cairn shareholders will now receive four, redeemable preference shares (RPS) with a coupon of 7.5% and tenure of 18 months compared with one earlier. The RPS will be listed on bourses, but their holders will also have an option to redeem them for cash after 30 days from issuance.
The consolidated gross debt of Vedanta is Rs 76,953 crore, while the cash and cash equivalents are Rs 52,299 crore as on June 30. This implies the net debt of Vedanta at Rs 24,654 crore. On the other hand, Cairn India has cash reserves of more than Rs 23,300 crore.