Anil Agrawal to delist Vedanta Ltd.; approaches banks for $2.5 Billion loan for funding

Vedanta Ltd.’s promoter Anil Agrawal, along with other board members had approved the delisting of the stock from Indian markets on 18th May. In order to finance this buyout, Mr. Agrawal has reached out to various banks with JP Morgan as the lead banker, according to LiveMint. The Economic Times also reported that Barclays, Standard Chartered Bank and Citi have been approached for the loan.

Currently, 49.5% of the company’s stake is publicly owned. According to the promoters, the company was bleeding a lot of cash through dividend payments on shares (₹18.85/share – FY2019). The cash thus saved on dividends will be used to pay the loans. In an interview to ET, Anil Agarwal had said the $2.5 billion buyout was “the last step of a complex exercise to restructure the group.”

On May 12, Vedanta Ltd. received a letter from Vedanta Resources, its promoter firm stating that the former wishes to buy out the public shareholding of the latter. A meeting with the Board of Directors was held on 18th May and approval for delisting was granted by the Board.

“Approval was granted to the Company to seek shareholders’ approval for aforesaid Delisting Proposal by way of special resolution through postal ballot and e-voting, and in this regard the draft of the postal ballot notice and the explanatory statement thereto were also approved,” said the company in a statement.

Following this statement, the company’s stock tanked 2% to ₹90.75 in a firm Mumbai market. The company received a lot of criticism for the delisting offer which stands at Rs 87.5 per share against much higher book value. However, this will be revised according to the reverse book building mechanism set out in the Delisting Regulations.

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