16th Nov 2006 07:03
Vedanta Resources PLC16 November 2006 16 November 2006 Vedanta Resources plc announces Sterlite's plans for US ADR Offering NOT FOR DISTRIBUTION IN THE UNITED STATES Vedanta Resources plc ("Vedanta" or the "Group") announces that its Indian-basedsubsidiary, Sterlite Industries (India) Limited ("Sterlite"), filed a Form F-1registration statement with the US Securities and Exchange Commission on15 November 2006 in relation to a proposed offering (the "Offering") ofSterlite's equity shares in the form of American Depositary Shares. The Offering enables the Group to capitalise on attractive growth opportunitiesin India and maintain a strong balance sheet. It will allow Sterlite to exerciseits call option to acquire the Government of India's remaining interest in HZL,the Group's zinc business, after the call option becomes exercisable on or after11 April 2007, assuming the Government of India does not exercise its right tomake a public offering of its remaining interest or sell part of its remaininginterest to HZL employees prior to Sterlite's exercise of the call option, asdescribed in the Sterlite press release on the Offering included below in thispress release. The Offering will also enable the Group to expand into thecommercial energy sector in India. The Board believes that with India's largecoal reserves, ongoing government deregulation and high demand for powerrelative to supply, this business represents an attractive growth opportunity. The Board believes that Sterlite is well positioned to undertake these growthopportunities and will enhance the Group's competitive advantage in India. TheGroup's entry into the commercial energy sector will leverage Sterlite'sexperienced management, strong project execution skills and experience inbuilding and operating captive power plants in its existing operations. Theentry into the commercial energy sector and consolidation of HZL minorities areconsistent with the Group's strategy to create a world-class metals and miningbusiness, leverage its established skills and generate strong returns. The Group currently has a 76.0% effective interest in Sterlite's issued sharecapital. Following the Offering Vedanta will continue to own a majority ofSterlite's equity shares and will retain management control. The following is a copy of the press release issued by Sterlite in regards tothe Offering: "Sterlite Industries (India) Limited16 November 2006 NOT FOR DISTRIBUTION IN THE UNITED STATESProposed Equity OfferingSterlite Industries (India) Limited ("Sterlite") announces that it filed a FormF-1 registration statement with the US Securities and Exchange Commission on15 November 2006 in relation to a proposed offering (the "Offering") of itsequity shares in the form of American Depositary Shares ("ADSs"). Sterliteintends to apply to have the ADSs listed on The New York Stock Exchange underthe symbol "SRL." BackgroundSterlite is India's largest non-ferrous metals and mining group based on netsales. Sterlite has a diversified product portfolio with substantial marketshares across the copper, zinc and aluminium metals markets in India. Its highquality assets and resources make it a low cost producer in copper and zinc.Sterlite is ideally positioned to capitalise on attractive growth opportunitiesarising from India's large mineral reserves, economic growth, proximity to othergrowing economies and large and inexpensive labour and talent pools. Sterlite's custom copper smelter business is operated within Sterlite, andSterlite owns a copper mine in Australia through one of its subsidiaries.Sterlite's zinc and aluminium businesses are owned and operated by itssubsidiaries Hindustan Zinc Limited, or HZL (64.9%-owned by Sterlite), andBharat Aluminium Company Limited, or BALCO (51.0%-owned by Sterlite),respectively. Sterlite has exercised its option to acquire the Government ofIndia's remaining stake in BALCO, though the exercise of this option has beencontested by the Government of India. Use of ProceedsSterlite intends to use the proceeds from the Offering for general corporatepurposes, including capital expenditures and working capital, reduction of debt,acquisition of complementary businesses and for possible consolidation of theownership of its subsidiaries. Specifically, Sterlite may use all or part of theproceeds of the Offering towards any of the following purposes: • Sterlite's current intention to exercise its call option to acquire the Government of India's remaining 29.5% ownership interest in HZL (or 26.0% if the Government of India exercises in full its right to sell 3.5% of HZL to HZL employees) after the call option becomes exercisable on or after 11 April 2007. However, it has been reported that the Government of India is taking steps to sell its remaining ownership interest in HZL through a public offer prior to Sterlite's exercise of the call option, though Sterlite has received no communication from the Government of India on this matter. If the Government of India sells its remaining ownership interest in HZL through a public offer, Sterlite may look into alternative means of increasing its ownership interest in HZL. • Entering the commercial power generation business in India by building the first phase, totalling 2,400 MW, of a thermal coal-based 2,400 MW power facility in the State of Orissa, India through Sterlite's wholly-owned subsidiary Sterlite Energy at a cost of approximately Rs 84,512 million ($1,900 million) over the next four years. Sterlite expects that the proceeds from the Offering will be used towards only a portion of this project as it expects that a significant part, currently estimated to be approximately 70%, of this project will be funded by external debt, the equity contribution for the project is expected to be spread out over the next four years and Sterlite intends to also use internally-generated capital towards the project. • A reduction of debt in an amount of up to Rs. 6,672 million ($150 million). • Acquiring complementary businesses that we determine to be attractive opportunities, though we have no agreements or commitments for material acquisitions of any businesses currently. UnderwritingMerrill Lynch & Co., Morgan Stanley & Co. International Limited and CitigroupGlobal Markets Inc. are acting as joint bookrunners for the proposed Offering."Under US GAAP, Sterlite's consolidated gross assets as at 31 March 2006 wereRs. 167,539 million. In the financial year ended 31 March Sterlite reportedconsolidated profit before tax was Rs. 30,782 million, under US GAAP. Vedanta will keep shareholders informed of further developments in the proposedOffering in due course. For further information, please contact:Sumanth Cidambi [email protected] Director - Investor Relations Tel: +44 20 7659 4732 / +91 22 5646 1531Vedanta Resources plc James Murgatroyd Robin WalkerFinsbury Tel: +44 20 7251 3801 About Vedanta Resources plcVedanta Resources plc is a London listed diversified metals and mining group.Its principal operations are located throughout India, with further operationsin Zambia, Australia and Armenia. The major metals produced are aluminium,copper, zinc, lead and gold. For further information, please visitwww.vedantaresources.com. About Sterlite Industries India LimitedSterlite Industries (India) Limited, a majority subsidiary of Vedanta Resourcesplc, is one of India's leading diversified Metals and Mining companies withinterests and operations in aluminium, copper and zinc and lead. The company'smain operating subsidiaries are Hindustan Zinc Limited for its zinc and leadoperations; Copper Mines of Tasmania Pty Limited for its copper operations inAustralia; and Bharat Aluminium Company Limited for its aluminium operations.The company operates its copper operations in India itself. DisclaimerThis communication shall not constitute an offer to sell or the solicitation ofan offer to buy securities, nor shall there be any sale of the securitiesdescribed herein, in any jurisdiction, including the United States, in whichsuch offer, solicitation or sale would be unlawful prior to registration orqualification under the securities laws of such jurisdiction. Sterlite has fileda registration statement in the United States under the Securities Act of 1933,as amended, in connection with the offer and sale of securities describedherein. Any public offering of the securities referred to herein to be made inthe United States will be made by means of a prospectus that forms a part ofthis registration statement and that contains detailed information aboutSterlite and its management, as well as financial statements. This press release contains "forward-looking statements" - that is, statementsrelated to future, not past, events. In this context, forward-looking statementsoften address our expected future business and financial performance, and oftencontain words such as "expects," "anticipates," "intends," "plans," "believes,""seeks," or "will." Forward-looking statements by their nature address mattersthat are, to different degrees, uncertain. For us, uncertainties arise from thebehaviour of financial and metals markets including the London Metal Exchange,fluctuations in interest and or exchange rates and metal prices; from futureintegration of acquired businesses; and from numerous other matters of national,regional and global scale, including those of a political, economic, business,competitive or regulatory nature. These uncertainties may cause our actualfuture results to be materially different that those expressed in ourforward-looking statements. We do not undertake to update our forward-lookingstatements. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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