Government aims to vote out Anil Agarwal-promoted Vedanta’s plan to sell its global zinc assets to Hindustan Zinc Ltd (HZL) for cash consideration of $2.98 billion, said a report on Monday.
Government holds 29.54 per cent stake in Hindustan Zinc Ltd (HZL), which was privatised more than two decades ago. CNBC TV18 on Monday reported that government will block the special resolution at Hindustan Zinc EGM. The M&A needs the special resolution to be passed with 75% majority.
Vedanta Resources’ efforts to manage its debt load have been dealt a blow after government opposed the mining conglomerate’s proposed $2.98-billion deal to move certain zinc assets from its flagship company to another in which it is a majority shareholder. The government opposed Hindustan Zinc Ltd, in which it holds a near 30% stake, buying the Africa-based assets from Vedanta Ltd, its top shareholder with a near-65% stake, as it was a “related party transaction”, reported Reuters on Monday.
Earlier this month, PTI reported the objections on the proposal were raised by all three government directors in the nine-member HZL board.
The development comes a week after Vedanta Resources said it had slashed net debt by $2 billion in the last 11 months, to $7.7 billion, seeking to allay concerns days S&P Global Ratings raised doubts about the billionaire Anil Agarwal-owned group’s financial health.
S&P Global had said the group’s ability to meet its financial obligations beyond September would depend on a planned $2 billion fundraise as well as the proposed sale of THL Zinc Ltd, a Vedanta Ltd unit that holds zinc assets in Africa.
That deal, announced on January. 19, is now in doubt after the government-nominated directors on Hindustan Zinc’s board opposed the acquisition and said in a letter they would oppose further resolutions.
The deal, analysts have said, is unfavourable to Hindustan Zinc’s minority shareholders, who have to sign off any board decision on related party deals in a meeting that Hindustan Zinc has to call within three months of announcing the deal.
Hindustan Zinc said in an exchange filing it had not yet called for the meeting but its board would consider the government’s position.
Hindustan Zinc is an integrated producer of zinc, lead and silver.
With inputs from agencies