Vedanta’s Acquisition of Electrosteel

Davis Polk is advising Lazard & Co., Limited as sponsor to Vedanta Resources plc on the acquisition by its Indian listed subsidiary, Vedanta Limited, of Electrosteel Steels Limited pursuant to a corporate insolvency resolution process implemented by way of the Indian Insolvency and Bankruptcy Code 2016.

The State Bank of India initiated insolvency proceedings against a number of Indian companies including Electrosteel in a bankruptcy court in June 2017. Electrosteel is the first company to get approval from the National Company Law Tribunal in India under the new corporate insolvency resolution process.

Pursuant to the resolution plan, a wholly owned subsidiary of Vedanta Limited will subscribe for shares of Electrosteel for an aggregate amount of INR 1,805 Crores ($269.9 million) and provide additional funds of INR 3,515 Crores ($525.7 million) by way of debt. Upon implementation of the resolution plan, Vedanta Limited will hold approximately 90% of the share capital of Electrosteel, with Electrosteel’s existing shareholders and financial creditors holding the remaining 10%. The funds received by Electrosteel will be used to settle the debts owed to the existing financial creditors. The transaction, the terms of which were announced on April 17, 2018 following approval by the National Company Law Tribunal in India, requires the approval of the shareholders of Vedanta Resources, Vedanta Limited’s parent company, as a Class 1 transaction under the U.K. Listing Rules.

Vedanta Resources is a London-listed diversified global natural resources company. The group produces aluminum, copper, zinc, lead, silver, iron ore, oil and gas, and commercial energy. It has operations in India, Zambia, Namibia and South Africa. Vedanta Limited, its majority owned subsidiary, is listed on the Bombay Stock Exchange and the National Stock Exchange of India and the New York Stock Exchange. Electrosteel was incorporated in Ranchi, Jharkhand, India as a public company in 2006 and has been listed on the Bombay Stock Exchange and National Stock Exchange of India since 2010. Electrosteel owns and operates a greenfield integrated steel manufacturing facility near Bokaro, Jharkhand, India.

The Davis Polk corporate team includes partner Will Pearce (Picture), European Counsel Jamie Corner and associate Fiona Tregeagle. Partner Jonathan Cooklin is providing tax advice.

Involved fees earner: Will Pearce – Davis Polk & Wardwell; Jamie Corner – Davis Polk & Wardwell; Fiona Tregeagle – Davis Polk & Wardwell; Jonathan Cooklin – Davis Polk & Wardwell;

Law Firms: Davis Polk & Wardwell;

Clients: Lazard;