Cairn-Vedanta Merger: LIC Says Still Not On Board

Mumbai: Financial powerhouse and the largest domestic investor LIC on Tuedsay denied having given its nod to the long-pending merger of Cairn India with the parent Vedanta Resources.

LIC, which had expressed concerns over valuation and debt situation of the entity post-merger, owns 9.06 per cent shares in Cairn India as of June quarter and 3.9 per cent in Vedanta as of March.

LIC's denial came after some media reports said the insurance giant has given nod to the proposed merger of Cairn with Vedanta.

"No approval has been given by LIC and such news is factually incorrect," the government-run insurance behemoth said in a statement on Tuesday.

Under the proposed merger, pending since last year, a Cairn India shareholder will get one Vedanta equity share and 7.5 preference shares for every share one holds.

The company needs to muster approval of at least half of the minority shareholders and LIC being the single largest domestic minority shareholder in the oil giant, its approval is crucial for the plan to get through.

A senior LIC official had earlier told PTI that they were not comfortable with the merger proposal on the valuation as well as debt fronts.

Edinburgh, UK-based Cairn Energy sold Cairn India to Anil Agarwal-led Vedanta for $8.67 billion in 2011. The British firm still holds a 9.82 per cent stake in Cairn India.

Through the merger, Mr Agarwal plans to use Rs 16,867 crore cash lying with Cairn to pay off part of Vedanta's debt. This has led to concern among minority shareholders about the cash that will become part of the new entity.

Vedanta is the largest producer of aluminium and copper in the country, and is the most indebted metals company. As of June 2015, Vedanta had debt pile of Rs 77,752 crore, excluding a $1.25 billion inter-company loan from Cairn India, which had Rs 16,867 crore cash on its books.

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