Cairn India To Merge Into Vedanta Ltd

Vedanta Ltd. and its subsidiary oil explorer Cairn India will merge in an all share swap deal, giving the parent access to Cairn's $2.7 billion (about Rs 17,000 crore) cash that would help it reduce debt. Directors of both the companies have approved the merger.

Minority shareholders of Cairn India will receive one equity share of Vedanta and one redeemable preference share of Rs 10 face value with 7.5% annual dividend, for each share held in Cairn India.
Chairman of Vedanta Plc said the following,

"The merger consolidates our position as India's leading diversified natural resources champion, uniquely positioned to support India's economic growth."

Access to Cairn's cash pile will help Vedanta repay part of its gross debt of Rs.77,752 crore, and improve its leverage ratio. Vedanta Ltd, which has already refinanced $400 million is now in the process of refinancing additional $2 billion by replacing loans from foreign banks, which are high-cost debt partly due to a weakening rupee, with loans from Indian banks so as to maintain blended cost of interest at $7.5% or a shade lower.

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