Vedanta Resources Bid For Electrosteel Steels Ruled Eligible

LONDON (Alliance News) - Miner Vedanta Resources PLC said Friday an Indian court has ruled that ...

Alliance News 10 August, 2018 | 5:44PM
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LONDON (Alliance News) - Miner Vedanta Resources PLC said Friday an Indian court has ruled that its unit Vedanta Ltd's bid for Electrosteel Steels Ltd was eligible.

A Kolkata National Company Law Appellate Tribunal ordered that Vedanta Ltd was not barred by section 29A(d) of the Insolvency and Bankruptcy Code.

The tribunal also declined to interfere with the approval of the resolution plan, which states the transaction fees and expenses will be paid using the company's existing cash resources.

In April, Vedanta Ltd secured court approval to acquire Electrosteel Steels Ltd from insolvency.

The unit will acquire a 90% stake in Electrosteel for USD275.7 million and provide additional debt funding of USD536.9 million. The remaining 10% of Electrosteel's share capital will be held by Electrosteel's existing shareholders and creditors who received shares in exchange for the debt owed to them.

Electrosteel owns and operates a greenfield integrated steel manufacturing facility in the Indian state of Jharkhand, which has a current capacity of 1.5 million tonnes per annum and the potential to increase to 2.5 mtpa. For the nine months ended December, the steel company reported a total income of USD372.8 million and a loss of USD132.4 million.

Vedanta Ltd expects the acquisition to complement its existing iron ore business as the vertical integration of steel manufacturing capabilities has the potential to generate significant efficiencies. It does not expect the deal to have any material impact on earnings for the financial year ending March 31 and anticipate returns to be received in the following years.

London listed shares in Vedanta Resources closed trading 0.6% higher at 838.00 pence on Friday.

By Paul McGowan; paulmcgowan@alliancenews.com

Copyright 2018 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar
Rating
Vedanta Resources PLC 844.00 GBX -0.66 -
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