Vedanta merger: Cairn calls shareholders' meeting on September 12

New Delhi: Cairn India has called a shareholders' meeting on September 12 to seek approval for the company's takeover by its parent Vedanta Ltd under a revised all-share deal.

In a bid to salvage the merger of cash-rich oil firm Cairn India with its debt-laden parent Vedanta, billionaire Anil Agarwal-led group had last month sweetened the deal by offering three additional preference shares in hope of winning over minority shareholders like LIC.

Through the merger, Agarwal is looking to create India's largest diversified natural resources firm, which could compete with BHP Billiton and Vale SA.

While the meeting will happen in Mumbai, shareholders can vote for the deal through e-voting commencing from 0900 hours on September 9 till 1700 hours on September 11, according to a notice sent by Cairn to its members.

Postal ballots can also be cast during the duration of the e-voting.

In the revised offer, Vedanta will give minority shareholders of Cairn India one equity share and four redeemable-preference shares with a face value of Rs 10 each. The preference shares will carry a coupon of 7.5 percent and tenure of 18 months.

Shareholders have to vote on a resolution seeking nod for "the proposed amalgamation embodied in the Scheme of Arrangement of Cairn India with Vedanta."

It also seeks to authorise the company board "to do all such acts, deeds, matters and things, as it may, in its absolute discretion deem requisite, desirable, appropriate or necessary to give effect to this resolution and effectively implement the amalgamation."

Vedanta is said to be wanting to use Rs 23,290 crore cash lying with Cairn to pay off part of its Rs 77,952 crore debt. It had in May rolled over a controversial USD 1.25-billion loan taken from Cairn India in July 2014.

Vedanta is India's most-indebted base metals company.

For the merger to go through, half of the minority shareholders, who together make up for 40 percent of the Cairn equity, have to approve the deal.

State-owned LIC holds 9.06 percent in Cairn India while the company's former promoter Cairn Energy Plc of UK has 9.82 percent interest.

The deal will go through if LIC votes in favour of the deal, source said.

Post-merger, London-listed parent Vedanta Resources Plc's holding in Vedanta will drop to 50.1 percent from 62.9 percent.

Cairn India's minority shareholders will own 20.2 percent and Vedanta minority shareholders 29.7 percent in the merged entity.

In June last year, Vedanta had offered shareholders of Cairn India one ordinary share and 7.5 percent redeemable preference share with a face value of Rs 10 each.