Sterlite was to transfer its aluminumand energy division to Vedanta's Madras

Tag : lead,copper
 Almost two weeks after announcing a restructuring plan,London-listed Vedanta Resources, the diversified mining giantcontrolled by Indian billionaire Anil Agarwal has decided not topursue the proposed group restructuring. The decision was taken inview of the recent changes in global financial markets and investorfeed back, the company said in a release to the stock exchanges.The decision was in direct response to shareholder requests tosimplify the current corporate structure and eliminate conflicts ofinterests. "Vedanta remains committed to simplifying andstreamlining its corporate structure in the interest of allshareholders," the company said.
On September 9, the group proposed to simply the structure of itsmajor businesses in India. The group wanted to create three units -one for copper and zinc, a second for aluminum and energy and athird one for iron ore. The group had proposed to transfer its79.4% stake in the Zambian copper entity Konkola Copper Mines toSterlite Industries, while Sterlite was to transfer its aluminumand energy division to Vedanta's Madras Aluminum.
Reports said that minority shareholders in Sterlite had someproblem with the proposed restructuring plan, especially over thevaluation of Konkola Copper Mines, which is part of the Vedantagroup. The swap ratio fixed for the merger and de-merger ofbusinesses wasn't favorable to investors. It was felt that thetransfer of the promising energy business from Sterlite to VedantaAluminum would diminish the value of Sterlite shares. Shareholdersand fund managers have reportedly said that the move benefitedpromoters and expressed concerns over bringing in a relativelyunknown African mining asset into the Indian shareholders' fold. Itwas said the scheme was designed to give tax and regulatoryadvantages rather than any strategic benefits. According to aCitigroup report, the Konkola valuation was expensive and thedilution wasn't justified. Konkola had last year reported a profitof $211 million, while Sterlite Industries posted a net profit of$2 billion.
In another development, Moody's Investors Service had threatened tolower its rating on $1.9 billion of Vedanta debt and Standard &Poor's cut its credit outlook for the company. The Children'sInvestment Fund (TCI), an activist hedge fund said therestructuring was against the interests of minority shareholdersand warned legal action against Vedanta.
Vedanta Resources plc is a London-listed FTSE 100 diversifiedmetals and mining major. The group produces aluminum, copper, zinc,lead, iron ore and commercial energy. Vedanta has operations inIndia, Zambia and Australia and a strong organic growth pipeline ofprojects. Earlier, the company announced expenditure of $9.8billion to boost its aluminum capacity.
On the BSE, Sterlite Industries was last trading at Rs.480.70, down1.40% on Thursday on a volume of 7.90 lakh shares. The stock hasdelivered a return of negative 22.27% in the last one month and a5.76% return over the one week. After the announcement onrestructuring plan, the stock fell nearly 30% to Rs.439.30 fromRs.622.35. On Wednesday, Sterlite ended at Rs.487.55 up 8.36% afterthe Vedanta group decided to scrap the restructuring plan.
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