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Vedanta To Sell Overseas Assets for $3 Billion

Updated: Jan 24, 2023

Vedanta Ltd., the Indian multinational mining company, recently announced plans to sell its international zinc operations to unit Hindustan Zinc Ltd. for $2.98 billion.

What is happening: Vedanta Ltd. announced plans to sell its international zinc operations to unit Hindustan Zinc Ltd. for $2.98 billion which would enable it to benefit from a dividend outflow that is Anil Agarwal’s cash cow.

  • Subject to regulatory permissions, Hindustan Zinc, a mining company with headquarters in Rajasthan, India, announced in an exchange filing that it will gradually acquire the assets of THL Zinc Ltd. Mauritius from its parent company over a period of around 18 months.

Why it matters: The billionaire owner of Vedanta, Agarwal, needs to make the transaction in order to decrease debt at Vedanta Resources following a failed attempt to delist Vedanta Ltd. in 2020 and to simplify the corporate structure of his commodities firm.

  • The deal can aid upstreaming of cash from the unit, deliver gains on higher valuations and the structuring avoids long-term capital gains tax.

Backdrop: According to information gathered by Bloomberg, Vedanta Resources has $4.7 billion in dollar bonds maturing over the next four years, with $900 million in notes due in the first half of 2023.

  • Vedanta owns about 65 percent of the miner and the Indian government holds about 30 percent.

The big picture: According to a report with the exchange, the company's total gross investments, cash, and cash equivalents decreased during the preceding few quarters and stood at 164.82 billion rupees ($2.03 billion) as of the end of December.

  • The costly acquisition of the international zinc assets would run down cash reserves at Hindustan Zinc

The numbers: Shares of Vedanta Ltd. advanced as much as 3 per cent in Mumbai Friday, while Hindustan Zinc slumped as much as 9.9 per cent.

  • The company’s total gross investments and cash and cash equivalents have eased in the past few quarters and were at 164.82 billion rupees ($2.03 billion) as of December’s end, an exchange filing showed.

Read in short: In order to gain from a dividend outflow, Vedanta Ltd. announced plans to sell Hindustan Zinc Ltd. its international zinc operations for $2.98 billion.


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