Vedanta Resources to Use IPO Proceeds to Part-Fund Cairn India Acquisition

Strategic Insights -

Vedanta Resources Plc, a London-listed miner, plans to use a significant portion of the proceeds from the initial public offering (IPO) of its Zambian copper business, Konkola Copper Mines (KCM), to part-fund its US$9.6 billion acquisition of Cairn India. The company aims to repay part of the US$6 billion debt taken to acquire a majority stake in Cairn India, as well as use the funds to part-fund the acquisition. The IPO is expected to raise approximately US$1.1 billion, with Vedanta intending to repay a US$1 billion bridge loan and potentially use the remaining funds for other purposes.

Key Takeaways:

  • Vedanta Resources plans to use IPO proceeds to part-fund its US$9.6 billion acquisition of Cairn India.
  • The company aims to repay part of the US$6 billion debt taken to acquire a majority stake in Cairn India.
  • Vedanta intends to repay a US$1 billion bridge loan arranged by Goldman Sachs, JP Morgan, and Morgan Stanley Bank.
  • The IPO of KCM is expected to raise approximately US$1.1 billion.
  • Anil Agarwal-run Vedanta had tied up US$6 billion in syndicate and bridge loans to fund the acquisition of Cairn India.
  • Vedanta has put April 15, 2011 as the deadline for closing the Cairn India acquisition after obtaining all necessary regulatory consents and government approvals.
  • The company has also obtained a bridge loan of US$1.5 billion and a syndicated term loan of US$3.5 billion to part-fund the acquisition.

Statistics:

  • US$9.6 billion: The total value of Vedanta's acquisition of Cairn India.
  • US$6 billion: The debt acquired by Vedanta to buy a majority stake in Cairn India.
  • US$1.1 billion: The expected proceeds from the IPO of Konkola Copper Mines (KCM).
  • US$1 billion: The bridge loan to be repaid from IPO proceeds.
  • US$1.5 billion: The bridge loan obtained by Vedanta from Barclays Capital, Citigroup, Credit Suisse, The Royal Bank of Scotland, and Standard Chartered Bank.
  • US$3.5 billion: The syndicated term loan obtained by Vedanta from Barclays Capital, Citigroup, Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley Bank, The Royal Bank of Scotland, and Standard Chartered Bank.
  • 40-51%: The stake in Cairn India acquired by Vedanta from the UK's Cairn Energy.
  • 20%: The stake in Cairn India acquired by Vedanta from the open market.

Sources:

  • PTI (no date mentioned)
  • Vedanta Resources Plc circular to shareholders (no date mentioned)