New Delhi: Hindustan Zinc Ltd (HZL) is unlikely to go ahead with the proposal to buy parent Vedanta’s global zinc business for $2.98 billion in cash, a deal that’s vehemently opposed by the government of India.
“HZL isn’t going to pursue this plan now,” one of the persons aware of the matter told Economic Times. Another person mentioned in the report said that Hindustan Zinc Ltd hasn’t presented any non-cash deal option to the government yet.
“It is likely to hold its next board meeting on April 21, by which time the current proposal would have lapsed,” the person added. The person also told that as per the rules, if the HZL board’s January 19 proposal isn’t endorsed by shareholders within three months, it will automatically lapse.
The report also quoted an HZL spokesperson who said that the date for the next board meeting hasn’t yet been “declared,” while declining to comment on the proposed cash deal.
Why is Government Against HZL-Vedanta Deal
Mining mogul Anil Agarwal-led Vedanta Resources holds 64.92 per cent stake in Hindustan Zinc Limited, while government of India is the minority holder with 29.54 per cent stake in the business. It’s said that Vedanta Resources is trying to dilute its debt through the sale of its zinc assets to HZL.
In February, the Ministry of Mines sent a letter to market regulator Sebi saying despite being the largest minority stakeholder (29.54 per cent) in Hindustan Zinc Ltd., the government was “kept in the dark” about the deal, the Reuters reported in April quoting a government official. In the case of a related-party transaction, minority shareholders need to approve the proposal by a majority.
Vedanta’s Debt Story
Amid the meltdown of the stock prices of Adani listed companies following Hindenburg Research’s report, Vedanta Resources also came under investors’ scrutiny given its huge debt levels.
Anil Agarwal revealed his aim to make Vedanta Resources a “zero debt company” during an interview with the Financial Times in April. The billionaire said that the total debt of Vedanta is “less than $13 billion” and that becoming “a zero-debt company is not a distant dream, but a medium-term, achievable goal.”
The mining mogul, in the same interview, dismissed concerns about the payment of debt maturities worth $900 million by June, 2023. He told FT that his commodities businesses are “throwing off enough cash“, adding that he expected $9 billion of profit across the group for the coming year.
Vedanta Resources, in February, had slashed its debt by $2 billion amid investor concerns following Adani Group’s steep fall after the publication of Hindenburg Research’s report. The Mumbai-listed company had a net debt of $9.66 billion as of 31 March 2022, as per information available on its website.
After repayments and borrowings, the company presently has an outstanding debt of $7.7 billion of which $3 billion is due for repayment in the fiscal starting April 2023, as per a TOI report.
The company had issued a statement in which it has “deleveraged by $2 billion in the past 11 months, thus achieving half of its $4 billion 3-year debt reduction commitment in the first year alone.”
from Latest News, Breaking News, LIVE News, Top News Headlines, Viral Video, Cricket LIVE, Sports, Entertainment, Business, Health, Lifestyle and Utility News | India.Com https://ift.tt/7P639Jc