Vedanta raises $1.65 bn to finance Cairn buy

The Anil Agarwal-promoted Vedanta Resources on Friday announced that the company has priced its offering of bonds at $1.65 billion,representing one of the largest corporate bond issuances by an Indian group. The proceeds from the bonds would be used to part finance Vedanta's acquisition of 40% stake in Cairn India.

The Anil Agarwal-promoted Vedanta Resources on Friday announced that the company has priced its offering of bonds at $1.65 billion (R7,425 crore),representing one of the largest corporate bond issuances by an Indian group. The proceeds from the bonds would be used to part finance Vedanta’s acquisition of 40% stake in Cairn India.

The bonds are being offered and sold in two tranches,consisting of $750 million (R 3,375 crore) aggregate principal amount of 6.75% bonds due 2016 and $900 million (R4,050 crore) aggregate principal amount of 8.25% bonds due 2021. The offering attracted significant interest,several times the issue size,from high quality institutional investors from Asia,Europe and US. This is a landmark transaction and represents largest non-banking corporate bond issuances by an Indian group, Vedanta said in a statement.

Barclays Capital,Citi,Credit Suisse,The Royal Bank of Scotland and Standard Chartered Bank are acting as joint global coordinators,joint lead managers and joint bookrunners. Goldman Sachs International,JP Morgan and Morgan Stanley are acting as joint bookrunners,and UniCredit Capital Markets LLC is acting as co-manager.

The bonds are rated Ba3,upon completion of the acquisition,or Ba2 in the event the Acquisition does not proceed,by Moodys,BB by S&P,and BB by Fitch.

To develop its presence in the attractive oil and gas sector,last August,Vedanta proposed buying 51% to 60% of Cairn India Ltd. for about $8.5 billion to $9.6 billion in cash. But the deal has been delayed due to a lack of government and regulatory approvals in India. Vedanta acquired an 8.1% stake through Sesa Goa’s open offer to shareholders,which closed on April 30. It also bought a 10.4% stake from Malaysia’s Petroliam Nasional Berhad,or Petronas.

Our proposed acquisition of Cairn India is fully funded with shareholder approvals granted and the open offer for shares of Cairn India has been completed. The transaction is currently awaiting approval from the government, Anil Agarwal,chairman,Vedanta Resources had said early this month while announcing the Group’s annual results.