At test is persuasive skill of Tom Albanese, Chief Executive Officer of Vedanta Resources Plc, as he fire fights the issues raised by the investor fraternity on the Cairn India-Vedanta Ltd merger. ‘With or without merger’ it will be business as usual at Cairn India, Albanese stressed, as he continues talking to shareholders and creditors to build consensus for the controversial merger.
Vedanta Ltd's shareholders, creditors will meet on September 8 to decide on the merger, while Cairn India's shareholders will decide on the merger on September 12.
Stating that Vedanta has not heard from the capital market regulator, SEBI, on the questions raised by two of the largest minority shareholders -- Cairn Energy and Mondrian Investment Partners -- of Cairn India on the tenure extension of $1.25 billion inter-corporate loan from it to THL Zinc, a Vedanta Group company, he said “I am not aware of any SEBI input on that.”
“This is a technical complex question. I have heard several technical complex arguments about it. I am not a lawyer so I cannot comment on those arguments. But, we do feel that we have a strong technical position about the structure within the Indian Companies Act.”
Defending the decision of Cairn India to extend inter-corporate loan, Albanese told BusinessLine that “there has to be some business sense that Cairn India extended the tenure of the loan. I haven’t heard Cairn Energy say anything publically or privately (against the decision to extend loan). Even this week, they had their results and they chose not to comment.”
“We are in touch with every single shareholder…those shareholders haven’t talked about it either,” he said, adding that the letter pre-dated the announcement of the revised terms of the merger announced on July 22.
“You can assume that when the board took everything into consideration, they recognised that they need the support of the minority shareholders along with the majority shareholders. Basically, what we did is increase the preference shares to 4. It was a 20 per cent premium to the one month average market price. Similar transactions in the Indian market recently have nothing like a 20 per cent premium. In fact, sometimes there is a discount,” Albanese argued.
As regards investments in Cairn India and future work programme, Albanese maintained that “with or without merger it will be work as usual. Cairn India’s capital budget for next year will be significantly higher than it was this year based upon events that were entirely in the hands of the Cairn management and independent of the acquisition five years ago and the proposed merger.”
Dismissing the comments that Cairn was a milking cow for Vedanta, Albanese argued, “…A year ago, people were talking about that Cairn India is at its best of days. Vedanta had all this capacity that it can’t get going for a variety of reasons and it has got some debt obligations. So how do you reconcile between the two. We said just watch we are going to do…you had asked me a year ago whether you are doing this (merger) just to pay down the Vedanta Resources Plc debt. But I said no, we will take care of that with or without the merger and we did it without the merger.”