Vedanta boosted by plan to cut debt and generate cash
INVESTORS yesterday welcomed Vedanta’s proposed restructuring to improve access to cash and reduce debt, saying the pressure is now on the company to implement the plan after a similar exercise failed more than three years ago.
Its stocks overall have underperformed the British sector by about 25 per cent since the start of last year, in part because of its web of subsidiaries and heavy debt burden.
Vedanta said it would take the first steps to eliminate cross holdings by merging base metals producer Sterlite Industries into iron ore miner Sesa Goa to create Sesa Sterlite, an eventual umbrella unit for others.
Sesa Sterlite, which would be 58 per cent owned by Vedanta, would be Vedanta’s main operating subsidiary, holding all its producing assets from oil and gas to power and aluminium. The only other remaining subsidiary directly owned by Vedanta would be Konkola Copper Mines, its Zambian operation. “We are supportive. The problem is they have got to get it through [shareholders in Sesa and Sterlite],” one top 10 shareholder said.
Vedanta was forced to scrap a similar exercise in 2008 after investors in separately listed subsidiaries opposed the plan.