Mumbai: Vedanta Ltd’s overseas subsidiary Cairn India Holdings Limited (CIHL) and Volcan Investments Limited have agreed to unwind entirely the structured investment entered between them ahead of the originally envisaged schedule.
With this, Volcan will exercise the early exchange option available to it on Friday. Consequent to this, the full exchange of its two issues of mandatory exchangeable bonds secured by shares in Anglo American Plc will settle on August 12.
The share price of Anglo American has close to doubled since Volcan invested, delivering attractive gains to all investors.
Volcan owns a 21 per cent stake in Anglo American, a globally diversified mining business that comprises of De Beers (largest diamond producer), copper, platinum and other precious metals, iron ore, coal and nickel.
In December 2018, CIHL had purchased an economic interest through a structured investment in equity shares of Anglo-American Plc from Volcan Investments for a total consideration of Rs 3,812 crore.
“The investment by CIHL which was entered into as part of its cash management activities has delivered a net gain of over 100 million dollars (about Rs 690 crore) in the eight-month period it was held. Cash proceeds from the settlement of the transaction will be paid to CIHL on August 13,” according to a statement.
“We are pleased this structured investment has achieved a superior return for CIHL as we expected when it was entered into,” said Vedanta’s Chief Executive Officer Srinivasan Venkatakrishnan.
“Our strategy continues to be to focus on our existing businesses where we believe that there are significant opportunities to unlock their full potential. The unwinding reflects our disciplined approach to treasury management and capital allocation together with our commitment at all times to act in the interests of all shareholders,” he said.
Following the redemption of the structured instrument, completed with due board approvals, CIHL will have no further economic exposure to Anglo American plc shares.
Vedanta Limited, a subsidiary of Vedanta Resources Limited, is one of the world’s leading diversified natural resource companies with business operations in India, South Africa, Namibia and Australia. Vedanta is a leading producer of oil and gas, zinc, lead, silver, copper, iron ore, aluminium, steel and commercial power.