Vedanta stock dips 1% after acquisition of Ferro Alloys Corporation

Shares of Vedanta slipped 1% on the BSE after the company said in the filing that it is implementing the approved Resolution Plan for Ferro Alloys Corporation.

The acquisition will complement the Company’s existing steel business as the vertical integration of Ferro manufacturing capabilities has the potential to generate significant efficiencies.

“Under the order dated January 30, 2020, of National Company Law Tribunal Cuttack, Vedanta Limited is implementing the approved Resolution Plan for Ferro Alloys Corporation Limited (“FACOR”),” the company said.

The consideration is in the form of upfront cash and non-convertible debentures which will mature in 4 equal instalments over a period of 4-years whereby management control of FACOR will be taken by the company.  

The consideration payable for the acquisition of FACOR on debt and cash-free basis under the approved Resolution Plan is Rs10cr as well as equivalent of cash balance in FACOR’s subsidiary, FACOR Power Limited (FPL) as Upfront Payment and zero-coupon, secured and unlisted Non-Convertible Debentures of aggregate face value of Rs270cr to the Financial Creditors payable equally over 4 years commencing March 2021.

FACOR is a company in the business of producing Ferro Alloys and owns a Ferro Chrome plant with capacity of 72,000 TPA, two operational Chrome mines and 100 MW of Captive Power Plant through its subsidiary, FPL.  

Meanwhile, the company will announce its Q3FY20 numbers today.

Stock view:
Vedanta Ltd is currently trading at Rs139.90, down by Rs1.05 or 0.74% from its previous closing of Rs140.95 on the BSE. The scrip opened at Rs141.30 and has touched a high and low of Rs141.80 and Rs139.60 respectively.

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