VEDANTA RESTRUCTURING: Sterlite & SesaGoa to merge !!!

As per the plan, the Sterlite Industries will merge into SESA GOA, which will be form as combined entity named to be SESA STERLITE. Sterlite shares holders will be given 3 Shares of SESA GOA for every 5 Shares of Sterlite held.

Vedenta Aluminium (VAL) and Madras Aluminium will be 100 % consolidated into SESA STERLITE. Vedanta’s direct holding of 38.8 % in Cairn India will be transferred to SESA GOA, together with the associated debt of $5.9 billion (Rs. 29,500 Cr) at cost. After the transfer, SESA STERLITE will have 58.9 % shareholding in Cairn India. The new entity SESA STERLITE will be seventh largest global diversified natural resources major by Earnings Before Interest , Tax and Depreciation. According to the chairman of VEDANTA Mr. Anil Aggarwal, SESA STERLITE will be the principle operating company in the group and with its high quality assets, growth projects and strong management; it is well placed to create value for all shareholders. This merger would be cost saving of around Rs. 1,000 Cr a year.

After consolidation, Vedanta will own 58.3 % in SESA STERLITE. The group’s 79.4 % shareholding in Konkola Copper Mines will continue to be directly held by Vedanta. Post consolidation VEDANTA will own 58.3 % stake in SESA STERLITE with VEDANTA PLC’s debt service liability will reduce by 61 % from $9.65 billion (Rs.48,250 Cr) to $3.8 billion (Rs.19,000 Cr). Post consolidation SESA STERLITE will have market capitalization of $20 billion (Rs. 1 lakhs crore) and will join the elite league of resources firms like BHP Billiton, Vale and Rio Tinto. Post consolidation the new entity SESA STERLITE will have net debt of $7.38 billion (Rs.36,936 Cr) with 8 % of interest cost.  

For SESA GOA – it will issue 3 Shares for every  5 shares of Sterlite; will issue 7.2 Crores shares to VEDANTA for its 70.5 % stake in Vedanta Aluminum; will issue 7.9 crores shares to Vedanta for its 94.8 % stake in MALCO

What VEDANTA will do – It will transfer its 38.8 % stake in Cairn India to Sesa Goa along with $5.9 billion debt. However, Hindustan Zinc and Bharat Aluminum Company in which government has stake will not be a part of merger.

SESA STERLITE will be listed in India and on New York Stock Exchange as American Depository Shares (ADS).        

SESA STERLITE STRUCTURE AFTER CONSOLIDATION

YEAR ENDED DEC 2011	Rs. Crore	$ Million
REVENUE	66,431	14.23
OPERATING PROFIT (EBITDA)	24,953	5.35
GROSS DEBT	66,717	13.55
OUTSTANDING SHARES	296 Crore	----