Government Blocks Vedanta’s Proposed $2.98 Billion Deal to Sell Zinc Assets to Hindustan Zinc
The Indian government is set to vote against the proposed $2.98 billion cash consideration deal for Hindustan Zinc to buy global zinc assets from Vedanta Resources, its top shareholder. The M&A requires a special resolution to be passed with a 75% majority, which the government is set to block at Hindustan Zinc EGM.
The move deals a blow to Vedanta Resources’ efforts to manage its debt load, which it has decreased by $2 billion in the last 11 months, as the government opposed the transaction due to it being a “related party transaction.” Reuters reported that the government, which holds a near 30% stake in Hindustan Zinc, had raised objections to the deal, and all three government directors in the nine-member HZL board had opposed the proposal earlier this month.
The deal was announced on January 19 and aimed to transfer certain zinc assets from Vedanta Ltd to Hindustan Zinc. The acquisition is unfavourable to Hindustan Zinc’s minority shareholders, who must sign off on related party deals in a meeting that Hindustan Zinc has to call within three months of announcing the deal.
S&P Global Ratings had recently raised concerns about the billionaire Anil Agarwal-owned group’s financial health, stating that its ability to meet financial obligations beyond September would depend on a planned $2 billion fundraise as well as the proposed sale of THL Zinc Ltd.
Hindustan Zinc, which was privatized more than two decades ago, has yet to call for the meeting but will consider the government’s position, according to an exchange filing.
Vedanta Ltd is a diversified natural resource group engaged in exploring, extracting and processing minerals and oil & gas. The group engages in the exploration, production and sale of zinc, lead, silver, copper, aluminium, iron ore and oil & gas. It has presence across India, South Africa, Namibia, Ireland, Liberia & UAE.
Its other businesses includes commercial power generation, steel manufacturing & port operations in India and manufacturing of glass substrate in South Korea and Taiwan.
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