Vedanta may borrow to fund Cairn take over
Vedanta Resources Plc, the mining company that agreed to buy control of oil explorer Cairn India Ltd, said it won’t sell shares to repay the US $6.5 billion of debt used to finance the deal.
Vedanta is borrowing the money for at least two years to take a stake of as much as 40 per cent in Cairn India. Sesa Goa Ltd, an iron ore producer in which Vedanta has a majority stake, will pay cash for 20 per cent of Cairn India. Vedanta’s earnings before interest, tax, depreciation and amortization will be more than US $5.5 billion this year, helping it to repay the debt, chairman Anil Agarwal said. “We are in a very comfortable position,” Agarwal, who founded the company and is the controlling investor, said in an at his home in London. “If necessary we can roll over and get a refinancing.”
Vedanta, which mines copper and zinc and smelts aluminum, agreed to pay as much as US $9.6 billion for as much as 60 per cent of Cairn India to diversify into oil with the Mangala field in Rajasthan. London-based Vedanta also plans further expansion in oil and gas using Cairn India’s exploration expertise. “I will allocate funds for them whatever their plans are, whether they go to India’s various places or go to Sri Lanka or go to Africa,” Agarwal said. Vedanta said in May Ebitda for its fiscal year ended 31 March rose 42 per cent to US $2.3 billion.
Vedanta plans to mine bauxite, a raw material used to make aluminum, in the Indian state of Orissa. A panel set up by the environment ministry said a permit to allow operations at the site should be rejected because the mine will endanger the livelihoods of local people. The ministry will consider the panel’s report and issue its decision on 20 August.
Agarwal said he expects to get permission to mine. “It’s nice that the debate is there, but I think at the end it will be all right,” he said. “We will not move an inch of grass unless we have a full clearance.” Agencies
Leave your response!