The government has opposed Anil Agarwal-promoted Vedanta’s plan to sell its global zinc assets to Hindustan Zinc Ltd (HZL), and has said that it will explore all legal options in the matters related to the deal.
The government has also asked Vedanta arm HZL to explore other cashless methods of acquisition of these assets.
In a letter dated February 17 to HZL, the ministry of mines said: “We have been informed by the directors nominated for appointment by government of India that in the meeting of board of directors of the company held on January 19, 2023, resolutions were approved for the creation of a wholly-owned overseas subsidiary of the company, funding such subsidiary to the extent of US$ 2,981 million and such subsidiary acquiring the shares of THL Zinc Ltd from THL Zinc Ventures Ltd (an entity of Vedanta Group).
Further, the ministry said, “We would like to bring to your attention that the government of India will oppose any proposed resolutions in furtherance of such agenda matter and will explore all legal avenues available to government of India in this regard.”
In the letter, the ministry urged the company to explore other cashless methods of acquisition of these assets.
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“In the context of the proposed resolutions, which envisage the acquisition of THL Zinc (a Vedanta company) by HZL (also a Vedanta company) thus being a related party transaction, we, Government of India would like to reiterate our dissent on the matter and the resolutions forming part of the agenda matter,” the letter said.
The government holds a 29.54 per cent stake in Hindustan Zinc. HZL acknowledged the receipt of the letter from the ministry and said in a filing to BSE that the proposed transaction can only be done post approval of the shareholders in the general meeting.
“Further, the notice calling the shareholders meeting has not been issued so far. The above letter shall be placed before the board of directors in the ensuing board meeting for its consideration,” HZL said.
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Hindustan Zinc’s CEO Arun Misra had said last week that the company is planning to get in touch with the mines ministry to resolve the differences over the acquisition of overseas assets of holding company Vedanta Ltd.
Valuation of the assets is among several concerns flagged by the government.
Vedanta had last month said it will sell its global zinc assets to HZL for cash consideration of $2,981 million. Vedanta holds 64.92 per cent equity share of HZL. Hindustan Zinc is an integrated producer of zinc, lead and silver.