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Vedanta Res PLC (VED)

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Tuesday 31 July, 2018

Vedanta Res PLC

RECOMMENDED CASH OFFER

RNS Number : 2736W
Vedanta Resources PLC
31 July 2018
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.

 

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE, OR FORM PART OF, AN OFFER OR AN INVITATION TO PURCHASE, SUBSCRIBE FOR OR SELL ANY SECURITIES OR A SOLICITATION OF ANY OFFER TO PURCHASE, SUBSCRIBE FOR OR SELL ANY SECURITIES. THE OFFER WILL BE MADE SOLELY BY WAY OF THE OFFER DOCUMENT AND, WHERE APPROPRIATE, THE RELATED FORM OF ACCEPTANCE WHICH TOGETHER WILL CONTAIN THE FULL TERMS AND CONDITIONS OF THE OFFER, INCLUDING DETAILS OF HOW THE OFFER MAY BE ACCEPTED.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

 

FOR IMMEDIATE RELEASE

31 July 2018

RECOMMENDED CASH OFFER

for

Vedanta Resources Plc ("Vedanta Resources")

by

Volcan Investments Limited ("Volcan Investments")

1.          Summary

Further to the announcement by Vedanta Resources and Volcan Investments on 2 July 2018 setting out the key terms of a possible offer for Vedanta Resources (the "Possible Offer Announcement"), the Independent Committee of the board of Vedanta Resources (the "Independent Committee") and Volcan Investments are pleased to announce the terms of a recommended cash offer to be made by Volcan Investments for the remaining issued and to be issued share capital of Vedanta Resources not currently owned or controlled by Volcan Investments (the "Offer").

Under the terms of the Offer, Vedanta Shareholders will receive:

US$10.89 per share in cash for each Vedanta Share

(the "Offer Price")

The Offer Price implies an equivalent value of 825 pence per Vedanta Share based on the exchange rate of £:US$ of 1.3203 as at 29 June 2018 (the "Announcement Exchange Rate"), being the last Business Day prior to the commencement of the Offer Period, and values the total issued share capital of Vedanta Resources at approximately US$3,070 million and the issued share capital not currently owned by Volcan Investments at approximately US$1,028 million.

The equivalent value of the Offer Price in £ sterling, being 825 pence based on the Announcement Exchange Rate, represents an illustrative premium of approximately:

(a)      27.6 per cent. to the Closing Price of 647 pence per Vedanta Share on 29 June 2018 (being the last Business Day prior to the commencement of the Offer Period); and

(b)      13.5 per cent. to the three-month volume weighted average price of 727 pence per Vedanta Share to 29 June 2018.

In addition, Vedanta Shareholders will be entitled to receive the dividend of US$0.41 per Vedanta Share in respect of the twelve months ended 31 March 2018, confirmed by Vedanta Resources on 17 July 2018 for payment on 22 August 2018 in respect of those shareholders on Vedanta Resources' share register on 20 July 2018 (the "FY2018 Dividend").

Taken together, the Offer Price and the FY2018 Dividend in aggregate represent a total value of US$11.30 per share (the "Total Offer Value"), which on the basis of the Announcement Exchange Rate represents an illustrative premium of approximately 32.4 per cent. to the Closing Price of 647 pence per Vedanta Share on 29 June 2018.

The Possible Offer Announcement outlined an offer price in £ sterling of 825 pence per Vedanta Share. The Offer Price under the Offer is expressed in US$. The US$ denominated Offer Price more closely reflects the underlying characteristics of Vedanta Resources' business activities, which are largely denominated in US$ and the fact that, as a result, Volcan Investments' funds are predominantly in US$.

A facility will be made available under which Vedanta Shareholders will be able to elect (subject to the terms and conditions of the facility) to receive the Offer Price in £ sterling (after deduction of any transaction or dealing costs associated with the conversion) at the applicable market exchange rate on the latest practicable date for fixing such rate prior to the relevant payment date. Further details of this facility and the election by Vedanta Shareholders accepting the Offer and wishing to receive their consideration in £ sterling will be set out in the Offer Document and the Form of Acceptance. For any Vedanta Shareholder electing to be paid in £ sterling the amount per Vedanta Share received may, depending on the prevailing exchange rate, result in a payment below or above 825 pence per Vedanta Share. On the basis of the exchange rate of £:US$ of 1.3147 as at 30 July 2018, being the latest practicable date before the publication of this announcement, the Offer Price implies an equivalent value of 828 pence per Vedanta Share.

2.          Background to and reasons for the Offer

Volcan Investments believes the key benefits of the Offer are as follows:

·               Attractive value: The Offer Price represents an attractive premium when considered on a relative basis compared to the recent share price of Vedanta Resources and in the context of relevant precedent minority buy-out transactions in the United Kingdom. The Offer Price represents an illustrative premium of approximately 27.6 per cent. to the Closing Price of 647 pence per Vedanta Share on 29 June 2018 and approximately 13.5 per cent. to the three-month volume weighted average price of 727 pence per Vedanta Share to 29 June 2018, being the last Business Day prior to the commencement of the Offer Period. Including the FY2018 Dividend of US$0.41 per share, the Total Offer Value is approximately US$11.30 per share, which on the basis of the Announcement Exchange Rate, represents an illustrative premium of approximately 32.4 per cent. to the Closing Price of 647 pence per Vedanta Share on 29 June 2018.

·        Certainty for investors: The Offer in cash provides an immediate and certain exit opportunity for Vedanta Shareholders at an attractive premium.

·          Simplification of the Vedanta Group structure: Simplification of the corporate structure of Vedanta Resources and its subsidiary undertakings (the "Vedanta Group") has been a key ongoing objective for the Vedanta Group, examples of which over the past several years include the merger of various Indian subsidiaries to create Vedanta Limited and the merger of Cairn India Limited into Vedanta Limited. Volcan Investments believes that now is the right time to take another important step in simplifying the structure of the Vedanta Group by removing a duplicative stock exchange listing, which it believes to be in the best interests of all stakeholders. Vedanta Resources was created to provide a platform to access a deeper pool of equity and debt capital in the United Kingdom and global markets, when predecessor entities were smaller and less liquid, and the Indian capital markets were less mature. Volcan Investments believes that the original rationale for listing Vedanta Resources is now less compelling, given the increased maturity of the Indian capital markets, together with Vedanta Limited's significant growth.

·           Ability for shareholders to reinvest proceeds in the Vedanta Group remains intact: Vedanta Shareholders will retain the ability to invest in Vedanta Limited, where the majority of Vedanta Group's profits and cash flow are generated, either through shares listed on the Indian Stock Exchanges, or through American Depositary Receipts listed on the New York Stock Exchange.

3.          Recommendation

The Independent Committee, who have been so advised by Lazard & Co., Limited ("Lazard") as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable so far as the Independent Vedanta Shareholders are concerned. In providing advice to the Independent Committee, Lazard has taken into account the commercial assessments of the Independent Committee.

Accordingly, the Independent Committee unanimously recommend that Independent Vedanta Shareholders accept the Offer.

As at the date of this announcement, the members of the Independent Committee are not interested in any Vedanta Shares.

4.          General

It is intended that the Offer will be implemented by means of a contractual takeover offer under the Takeover Code and within the meaning given to that term in section 974 of the 2006 Act. Volcan Investments reserves the right, subject to the consent of Vedanta Resources and the Panel, to effect the Offer by way of a court-sanctioned scheme of arrangement under Part 26 of the 2006 Act.

The Offer is being made subject to the Conditions and certain further terms set out in Appendix 1 and to the full terms and conditions to be set out in the Offer Document.

If the Offer becomes or is declared unconditional in all respects and if Volcan Investments has: (i) by virtue of its shareholdings and acceptances of the Offer acquired, or agreed to acquire, Vedanta Shares representing at least 75 per cent. of the voting rights of Vedanta Resources; and (ii) obtained acceptances of the Offer or has acquired, or agreed to acquire, Vedanta Shares from Independent Vedanta Shareholders that represent a majority of the voting rights held by the Independent Vedanta Shareholders on the date of this announcement (the "Delisting Threshold"), Volcan Investments intends to procure that Vedanta Resources will make an application for the cancellation of the listing of its shares on the Official List ("Official List") of the Financial Conduct Authority ("FCA") and for the cancellation of their admission to trading on the London Stock Exchange's main market for listed securities. It is anticipated that the cancellation of the listing on the Official List and the cancellation of the admission to trading on the London Stock Exchange's main market for listed securities will take effect no earlier than 20 Business Days after the date on which the Offer becomes, or is declared unconditional in all respects provided that Volcan Investments has attained the Delisting Threshold. Delisting would significantly reduce the liquidity and marketability of any Vedanta Shares not assented to the Offer. It is noted that Volcan Investments has received confirmations in a form satisfactory to it that Vedanta Resources' existing lenders will waive the obligation to repay its existing facilities upon delisting of Vedanta Resources.

As at the date of this announcement, Volcan Investments and its concert parties hold 188,467,922 Vedanta Shares representing approximately 66.87 per cent. of Vedanta Resources' total issued share capital. Based on the current interests of Volcan Investments and its concert parties, it is expected that the Delisting Threshold will be met if and when Volcan Investments and its concert parties hold or Volcan Investments has received valid acceptances in respect of the Offer relating to, in aggregate, approximately 83 per cent. of the issued share capital of Vedanta Resources.

Following the Offer becoming or being declared unconditional in all respects and the Vedanta Shares having been de-listed, Volcan Investments may procure that Vedanta Resources be re-registered as a private company.

If Volcan Investments acquires, whether through acceptances under the Offer or otherwise, 90 per cent. or more of the Vedanta Shares to which the Offer relates and the Offer becomes or is declared unconditional in all respects, Volcan Investments intends to exercise its rights pursuant to the provisions of Chapter 3 of Part 28 of the 2006 Act to acquire compulsorily the remaining Vedanta Shares in respect of which it has not received acceptances of the Offer on the same terms as the Offer.

The Offer will become or be declared unconditional in all respects only if all Conditions to the Offer have been satisfied or, where applicable, waived. Subject to the satisfaction or, where applicable, waiver of the Conditions, it is expected that completion of the Offer will occur in Q4 2018.

The Offer Document, containing further information about the Offer, together with the Form of Acceptance accompanying the Offer Document will be published within 28 days of this announcement (or such later date as may be agreed with the Panel) and the Offer Document will be made available on Vedanta Resources' website at www.vedantaresources.com/investor-relations/volcan-offer by 12 noon on the Business Day following the announcement that the Offer Document has been posted to Vedanta Shareholders.

Commenting on the Offer Mr Anil Agarwal said:

"Following the Possible Offer Announcement, we are pleased to announce this recommended Offer for Vedanta Resources, which is a natural progression of our journey to simplify the Vedanta Group's corporate structure. We are very proud to have been the first Indian company to be listed on the London Stock Exchange in 2003, which was a major milestone for the Vedanta Group. The London listing has served us extremely well since that time. However, given the subsequent growth of our underlying businesses and the maturity of the Indian capital markets, together with related feedback from our shareholders and other stakeholders, we have concluded that a separate London listing is no longer necessary to achieve the Vedanta Group's strategic objectives. In taking this important step towards greater group simplification, we wanted to ensure that the Independent Vedanta Shareholders were provided with the opportunity to exit on attractive terms, and I believe this recommended Offer will deliver on that objective."

Commenting on the Offer, Deepak Parekh, Senior Independent Director and Chairman of the Independent Committee, said:

"It is the view of the Independent Committee that this is an attractive offer for Independent Vedanta Shareholders. It secures delivery of future value today in cash, whilst providing shareholders with the ability, should they choose, to retain exposure to the Vedanta Group growth story by reinvesting all or part of  their offer proceeds in Vedanta Limited. The increased maturity and liquidity of the Indian markets has diminished the rationale for maintaining a UK listed entity making this the next logical step in the Vedanta Group's long stated objective to simplify its corporate structure, particularly as the realisation of value at Vedanta Resources is impeded by the complex corporate and financing structure of the Vedanta Group."

This summary should be read in conjunction with, and is subject to, the full text of the following announcement (including its Appendices). The Offer will be subject to the Conditions and certain further terms set out in Appendix 1 and to the full terms and conditions to be set out in the Offer Document. Appendix 2 contains the sources and bases of certain information contained in this summary and the following announcement. Appendix 3 contains the definitions of certain terms used in this summary and the following announcement.

J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") and Credit Suisse International ("Credit Suisse") are acting as financial advisers to Volcan Investments.

Lazard is acting as financial adviser and Rule 3 adviser to the Independent Committee.

Ashurst LLP is acting as legal adviser to Volcan Investments and Latham & Watkins LLP is acting as legal adviser to the Independent Committee.

Enquiries:

Vedanta Resources Plc

Tel: +44 020 7499 5900

Arun Kumar

 

Viral Gathani

 

Rashmi Mohanty

 

 

 

Lazard & Co., Limited (financial adviser  and Rule 3 adviser to the Independent Committee)

Tel: +44 20 7187 2000

Spiro Youakim

 

William Lawes

 

Laurence Rehfeld

 

Fiona McHardy

 

 

 

J.P. Morgan Cazenove (lead financial adviser to Volcan Investments

Tel: +44 207 742 4000

Charles Harman

 

Barry Weir

 

Jamie Riddell

 

James Robinson

 

 

 

Credit Suisse International (financial adviser to Volcan Investments)

Tel: + 44 207 888 8888

Mark Echlin

 

Joe Hannon

 

Emil Huseynov

 

Kush Nanjee

 

 

 

Finsbury (Public Relations Adviser to the Independent Committee)

Tel: +44 207 251 3801

Daniela Fleischmann

 

Humza Vanderman

 

 

Vedanta Resources LEI Number: 2138007MYEKPEAZQTW83

Important Notice

This announcement is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Offer or otherwise, nor shall there be any sale, issuance or transfer of securities of Vedanta Resources in any jurisdiction in contravention of applicable law.

The Offer will be made solely by means of the Offer Document and, in respect of Vedanta Shares held in certificated form, the Form of Acceptance accompanying the Offer Document, which will contain the full terms and conditions of the Offer including details of how to accept the Offer. Any approval, acceptance, decision or other response to the Offer should be made only on the basis of the information in the Offer Document and, in respect of Vedanta Shares held in certificated form, the Form of Acceptance. Vedanta Shareholders are strongly advised to read the formal documentation in relation to the Offer once it has been despatched.

J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") which is authorised in the United Kingdom by the Prudential Regulation Authority ("PRA") and regulated in the United Kingdom by the PRA and the FCA, is acting as financial adviser exclusively for Volcan Investments and no one else in connection with the Offer and will not regard any other person as its client in relation to the Offer and will not be responsible to anyone other than Volcan Investments for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for providing advice in connection with the Offer or any matter referred to herein.

Credit Suisse International ("Credit Suisse"), which is authorised by the PRA and regulated by the FCA and the PRA in the United Kingdom, is acting as financial adviser exclusively for Volcan Investments and no one else in connection with the matters set out in this announcement and will not be responsible to any person other than Volcan Investments for providing the protections afforded to clients of Credit Suisse, nor for providing advice in relation to the content of this announcement or any matter referred to herein. Neither Credit Suisse nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Credit Suisse in connection with this announcement, any statement contained herein or otherwise.

Lazard & Co., Limited ("Lazard"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively as financial adviser to the Independent Committee and no one else in connection with the Offer and will not be responsible to anyone other than the Independent Committee for providing the protections afforded to clients of Lazard nor for providing advice in relation to the Offer or any other matters referred to in this announcement. Neither Lazard nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard in connection with this announcement, any statement contained herein or otherwise.

Overseas Jurisdictions

This announcement has been prepared in accordance with English law and the Takeover Code and the information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England. The statements contained in this announcement are made as at the date of this announcement, unless some other time is specified in relation to them, and there shall be no implication that there has been no change in the facts set forth in this announcement since such date.

The release, publication or distribution of this announcement and the availability of the Offer in or into jurisdictions other than the United Kingdom may be affected by the laws and regulations of those jurisdictions. Persons who are not resident in the United Kingdom, or who are subject to the laws of any jurisdiction other than the United Kingdom, should inform themselves about, and observe any applicable requirements. Any person (including, without limitation, nominees, trustees and custodians) who would, or otherwise intends to, forward this announcement, the Offer Document or any accompanying document to any jurisdiction outside the United Kingdom should refrain from doing so and seek appropriate professional advice before taking any action. Any failure to comply with the applicable legal or regulatory requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Offer disclaim any responsibility and liability for the violation of such restrictions by any person. Further details in relation to Overseas Shareholders will be contained in the Offer Document.

The Offer will not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, telephonic or electronic) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, a Restricted Jurisdiction, and no person may accept the Offer by any such use, means, instrumentality or facility or from within a Restricted Jurisdiction. Accordingly, copies of this announcement and the formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded or distributed in, into or from a Restricted Jurisdiction and persons receiving this announcement (including custodians, nominees and trustees) must not distribute or send it into or from a Restricted Jurisdiction.

Important information for US shareholders

Vedanta Resources is a public limited company incorporated in England. The Offer will be made to Vedanta Shareholders in the United States in compliance with the applicable US tender offer rules under the US Securities Exchange Act of 1934, as amended (the "US Exchange Act"), including Regulation 14E thereunder, and securities laws and otherwise in accordance with the requirements of English law, the Takeover Code, the Panel, the London Stock Exchange and the FCA. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, the offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer law and practice. Vedanta Resources' financial information, including any included in the offer documentation, will not have been prepared in accordance with US generally accepted accounting principles, or derived therefrom, and may therefore differ from, and not be comparable with, financial information of US companies. The Offer will be made in the United States by Volcan Investments and no one else.

Neither the US Securities Exchange Commission nor any US state securities commission has approved or disapproved the Offer or passed upon the adequacy or completeness of this announcement. It may be difficult for US holders of Vedanta Resources securities to enforce their rights under any claim arising out of the US federal securities laws, since Volcan Investments and Vedanta Resources are located outside the United States, and some or all of their officers and directors may be resident outside the United States. US Vedanta Shareholders may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgement and a US court may lack jurisdiction over such persons.

The receipt of cash pursuant to the Offer may have tax consequences in the United States and under other applicable tax laws and such consequences, if any, are not described herein. US Vedanta Shareholders are urged to consult with their own legal, tax and financial advisers in connection with making a decision regarding the Offer.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th Business Day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website and hard copies

A copy of this announcement and the documents required to be published by Rule 26 of the Takeover Code will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Vedanta Resources' website at www.vedantaresources.com/investor-relations/volcan-offer by no later than 12 noon on the Business Day following the date of this announcement. For the avoidance of doubt, the content of the website is not incorporated into and does not form part of this announcement.

Vedanta Shareholders may request a hard copy of this announcement by contacting  0370 707 1388 (from within the UK) or on +44 370 707 1388 (if calling from outside the UK) during business hours or by submitting a request in writing to Computershare at Computershare Investors Services PLC, The Pavilions, Bridgwater Road, Bristol BS13 8AE. If you have received this announcement in electronic form, copies of this announcement and any document or information incorporated by reference into this announcement will not be provided unless such a request is made.
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE, OR FORM PART OF, AN OFFER OR AN INVITATION TO PURCHASE, SUBSCRIBE FOR OR SELL ANY SECURITIES OR A SOLICITATION OF ANY OFFER TO PURCHASE, SUBSCRIBE FOR OR SELL ANY SECURITIES. THE OFFER WILL BE MADE SOLELY BY WAY OF THE OFFER DOCUMENT AND, WHERE APPROPRIATE, THE RELATED FORM OF ACCEPTANCE WHICH TOGETHER WILL CONTAIN THE FULL TERMS AND CONDITIONS OF THE OFFER, INCLUDING DETAILS OF HOW THE OFFER MAY BE ACCEPTED.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

31 July 2018

RECOMMENDED CASH OFFER

for

Vedanta Resources Plc ("Vedanta Resources")

by

Volcan Investments Limited ("Volcan Investments")

1.          Introduction

Further to the announcement by Vedanta Resources and Volcan Investments on 2 July 2018 setting out the key terms of a possible offer for Vedanta Resources (the "Possible Offer Announcement"), the Independent Committee of the board of Vedanta Resources (the "Independent Committee") and Volcan Investments are pleased to announce the terms of a recommended cash offer to be made by Volcan Investments, for the remaining issued and to be issued share capital of Vedanta Resources not currently owned or controlled by Volcan Investments (the "Offer").

Volcan Investments is a holding company beneficially wholly owned by the Anil Agarwal Discretionary Trust. As at 30 July 2018, being the latest practicable date before the publication of this announcement, Volcan Investments holds approximately 66.52 per cent. of Vedanta Resources' total issued share capital.

Following receipt of an initial proposal from Volcan Investments, the Independent Committee was formed to review and evaluate that proposal, and it decided to engage, with the support of its advisers, in negotiations with Volcan Investments. The Independent Committee consists of the members of Vedanta Resources' board of directors who are considered independent as they are neither appointees of, nor interested in any shares in, Volcan Investments.

2.          The Offer

The Offer, which will be on the terms and subject to the Conditions set out below and in Appendix 1 to this announcement, and to be set out in the Offer Document and the Form of Acceptance, will be made on the following basis:

US$10.89 per share in cash for each Vedanta Share

(the "Offer Price")

The Offer Price implies an equivalent value of 825 pence per Vedanta Share based on the exchange rate of £:US$ of 1.3203 as at 29 June 2018 (the "Announcement Exchange Rate"), being the last Business Day prior to the commencement of the Offer Period, and values the total issued share capital of Vedanta Resources at approximately US$3,070 million and the issued share capital not currently owned by Volcan Investments at approximately US$1,028 million.

The equivalent value of the Offer Price in £ sterling, being 825 pence based on the Announcement Exchange Rate, represents an illustrative premium of approximately:

(a)      27.6 per cent. to the Closing Price of 647 pence per Vedanta Share on 29 June 2018 (being the last Business Day prior to the commencement of the Offer Period); and

(b)      13.5 per cent. to the three-month volume weighted average price of 727 pence per Vedanta Share to 29 June 2018.

In addition, Vedanta Shareholders will be entitled to receive the dividend of US$0.41 per Vedanta Share in respect of the twelve months ended 31 March 2018, confirmed by Vedanta Resources on 17 July 2018 for payment on 22 August 2018 in respect of those shareholders on Vedanta Resources' share register on 20 July 2018 (the "FY2018 Dividend").

Taken together, the Offer Price and the FY2018 Dividend in aggregate represent a total value of US$11.30 per share (the "Total Offer Value"), which on the basis of the Announcement Exchange Rate represents an illustrative premium of approximately 32.4 per cent. to the Closing Price of 647 pence per Vedanta Share on 29 June 2018.

The Possible Offer Announcement outlined an offer price in £ sterling of 825 pence per Vedanta Share. The Offer Price under the Offer is expressed in US$. The US$ denominated Offer Price more closely reflects the underlying characteristics of Vedanta Resources' business activities, which are largely denominated in US$ and the fact that, as a result, Volcan Investments' funds are predominantly in US$.

A facility will be made available under which Vedanta Shareholders will be able to elect (subject to the terms and conditions of the facility) to receive the Offer Price in £ sterling (after deduction of any transaction or dealing costs associated with the conversion) at the applicable market exchange rate on the latest practicable date for fixing such rate prior to the relevant payment date. Further details of this facility and the terms and conditions of the election available to Vedanta Shareholders accepting the Offer and wishing to receive their consideration in £ sterling will be set out in the Offer Document and Form of Acceptance. For any Vedanta Shareholder electing to be paid in £ Sterling the amount per Vedanta Share received may, depending on the prevailing exchange rate, result in a payment below or above 825 pence per Vedanta Share. On the basis of the exchange rate of £:US$ of 1.3147 as at 30 July 2018, being the latest practicable date before the publication of this announcement, the Offer Price implies an equivalent value of 828 pence per Vedanta Share.

3.          Background to and reasons for the Offer

Simplification of the corporate structure of Vedanta Resources and its subsidiaries (the "Vedanta Group") has been a key ongoing objective for the Vedanta Group, examples of which over the past several years include the merger of various Indian subsidiaries to create Vedanta Limited, and the merger of Cairn India Limited into Vedanta Limited. Volcan Investments believes that now is the right time to take another important step in simplifying the structure of the Vedanta Group by removing a duplicative stock exchange listing, which it believes to be in the best interests of all stakeholders.

Vedanta Resources was originally created to provide a platform for the Vedanta Group to access a deeper pool of equity and debt capital in the United Kingdom and global markets, when predecessor entities were smaller and less liquid, and the Indian capital markets were less mature. The listing has proved successful, supporting significant expansion across the Vedanta Group's original assets and entry into a number of new commodity sectors, including oil and gas, iron ore and power while delivering significant positive returns to all Vedanta Shareholders. However, Volcan Investments now believes that the original rationale for listing Vedanta Resources is less compelling, given the increased maturity of the Indian capital markets, together with Vedanta Limited's significant growth.

Volcan Investments believes that the Offer provides an opportunity to continue the successful development of the Vedanta Group's business in a simplified and efficient manner. Importantly, Vedanta Shareholders also retain the ability to invest in the Vedanta Group through Vedanta Limited, where the majority of the Vedanta Group's profits and cash flow are generated, either through the shares, listed on the Indian Stock Exchanges, or through the American Depositary Receipts listed on the New York Stock Exchange.

4.          Financing of the Offer

The cash consideration payable to Vedanta Shareholders under the terms of the Offer will be financed by a new facilities agreement entered into by, among others, Volcan Investments as guarantor, Volcan Cyprus as borrower and Credit Suisse AG, Singapore Branch and Standard Chartered as lenders in an aggregate amount of US$1,100,000,000 (the "Facility Agreement").

J.P. Morgan Cazenove is satisfied that sufficient cash resources are available to Volcan Investments to satisfy in full the cash consideration payable as a result of full acceptance of the Offer.

5.          Further terms of the Offer

Vedanta Shares will be acquired by Volcan Investments pursuant to the Offer fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre‑emption and any other third party rights of any nature whatsoever and together with all rights now or hereafter attaching thereto, including without limitation voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after 31 July 2018 (other than the FY2018 Dividend).

Save for the FY2018 Dividend, in so far as any other dividend or other distribution or return of value is authorised, declared, made, paid or payable by Vedanta Resources in respect of Vedanta Shares on or after 31 July 2018, Volcan Investments will be entitled to reduce the price payable under the Offer in respect of the Vedanta Shares by the aggregate amount of any such dividend, other distribution or return of value except where the Vedanta Shares are or will be acquired on a basis which entitles Volcan Investments to receive the dividend, other distribution or return of value and retain it.

Vedanta Shareholders who are on the register of members of Vedanta Resources on 20 July 2018 shall be entitled to receive the FY2018 Dividend, which will be paid out on 22 August 2018.

6.          Recommendation

The Independent Committee, who have been so advised by Lazard & Co., Limited ("Lazard") as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable so far as the Independent Vedanta Shareholders are concerned. In providing advice to the Independent Committee, Lazard has taken into account the commercial assessments of the Independent Committee.

Accordingly, the Independent Committee unanimously recommend that Independent Vedanta Shareholders accept the Offer.

As at the date of this announcement, the members of the Independent Committee are not interested in any of the Vedanta Shares.

7.          Background to and reasons for the recommendation

Vedanta Resources was created to provide a platform to enable the Vedanta Group to access a deeper pool of equity and debt in the UK and global markets at a time when entities within the Vedanta Group were smaller and less liquid. The listing of Vedanta Resources enabled the Vedanta Group to fund its growth and it has become, principally through its investment in Vedanta Limited, one of the largest diversified mining companies in the world and the only one with significant exposure to India. However, given the increased maturity and liquidity of the Indian markets and strength of Vedanta Limited, the rationale for keeping Vedanta Resources as a separate listed vehicle through which to invest in the Vedanta Group is less compelling, particularly as the realisation of value at Vedanta Resources is impeded by the complex corporate and financing structure of the group and its distance from the cash flows at Vedanta Limited.

The Vedanta Group's current corporate structure and the debt obligations at the Vedanta Resources level have also contributed to Vedanta Resources' significantly higher risk profile compared to many of its mining company peers. This has had the effect of Vedanta Shares consistently trading in the public markets at a discounted valuation to its peers and significant volatility in Vedanta Resources' share price. During Vedanta Resources' FY2018, Vedanta Resources' share price fluctuated between a high of 954 pence and a low of 575 pence. More recently, Vedanta Resources' share price has been impacted by a fall in commodity prices in the year to date from 1 January 2018 to 30 July 2018 across all the commodities which the Vedanta Group exploits, with the exception of oil, and on average by 11.7 per cent. weighted on the basis of Vedanta Resources' FY2018 EBITDA including oil and 18.7 per cent. excluding oil.

The Vedanta Group has had a long-stated strategy to simplify its corporate structure, a process which gathered additional momentum in 2012 when the Vedanta Group announced the merger of its Indian subsidiaries into Vedanta Limited. Since then, the Vedanta Group has continued this strategy and last year merged Cairn India into Vedanta Limited. The buyout of the Independent Vedanta Shareholders and delisting of Vedanta Resources is believed by Volcan Investments to be the next logical step.

The Independent Committee believes that the Offer is in the best interests of Independent Vedanta Shareholders, as it allows them to realise an upfront attractive cash premium for their Vedanta Shares, accelerating and de-risking the return of value to Vedanta Shareholders. They also retain the ability to invest in the Vedanta Group through Vedanta Limited shares, which are listed on the Indian Stock Exchanges, or the Vedanta Limited American Depositary Receipts listed on the New York Stock Exchange.

Following an initial approach from Volcan Investments, the Independent Committee retained and sought advice from its independent adviser, Lazard, and negotiated with Volcan Investments in order to achieve an offer price of 825 pence per Vedanta Share, which was announced in the Possible Offer Announcement, and which is reflective of the Offer Price of US$10.89, being the US dollar equivalent at the exchange rate of £:US$ of 1.3203 as at 29 June 2018. Together with payment of the FY2018 Dividend, the resulting Total Offer Value is US$11.30 per share. After Volcan Investments indicated to the Independent Committee its desire to make any firm offer in US dollars, the Independent Committee negotiated a fixed exchange rate of 1.3203, being the exchange rate prevailing on 29 June 2018, the last Business Day prior to the commencement of the Offer Period. On the basis of the £:US$ exchange rate of 1.3147 as at 30 July 2018, being the latest practicable date before the publication of this announcement, the Offer Price implies an equivalent value of 828 pence per Vedanta Share, compared to the offer price of 825 pence in the Possible Offer Announcement.

The Offer Price, on the basis of the Announcement Exchange Rate represents an illustrative premium of approximately 27.6 per cent. to the closing share price of 647 pence of each Vedanta Share on 29 June 2018 and approximately 13.5 per cent. to the three-month volume weighted average price of 727 pence per Vedanta Share to 29 June 2018. This is an attractive premium when compared with the recent share price of Vedanta Resources and in the context of relevant precedent minority buy-out transactions in the United Kingdom.

It is for these reasons that the Independent Committee believes that the terms of the Offer are fair and reasonable and the Independent Committee unanimously recommends Independent Vedanta Shareholders to accept the Offer.

8.          Information relating to Volcan Investments

Volcan Investments was incorporated under the International Business Companies Act, 2000 of the Commonwealth of the Bahamas ("The Bahamas"). Volcan Investments is wholly-owned by Conclave PTC Limited, a private trust company which was incorporated under the laws of The Bahamas, and is ultimately beneficially owned by the Anil Agarwal Discretionary Trust. The nature of the business of Volcan Investments is that of an investment holding company, its purpose being to hold all of the assets of the Anil Agarwal Discretionary Trust. Volcan Investments otherwise conducts no business or trade. Mr Anil Agarwal is a director of Conclave PTC Limited and a beneficiary of the Anil Agarwal Discretionary Trust. Mr Agarwal also founded the Vedanta Group in 1976.

9.          Information relating to Vedanta Resources

Vedanta Resources is a UK listed global diversified natural resources company. The Vedanta Group is primarily engaged in aluminium, copper, zinc, lead, silver, iron ore, oil and gas and commercial power generation businesses. Vedanta Resources has operations spanning a vast value chain of exploration, asset development, extraction, processing and value addition. The Vedanta Group's business is principally located in India, with approximately 58 per cent. of the Vedanta Group's revenue in FY2017 being derived from operations within India. In addition, the Vedanta Group has assets and operations in Zambia, Namibia and South Africa. The business model of Vedanta Resources is focused on growth, expansion and value creation for its shareholders. Vedanta Resources reported a 33 per cent. increase in revenue for FY2018 with revenue totalling US$15.4 billion.

Vedanta Resources currently has corporate family ratings of 'B+' with a stable outlook from Standard & Poor's ("S&P") and 'Ba3' with a stable outlook from Moodys. S&P through its report released on 3 July 2018 commented that the expected Offer and subsequent delisting would not affect the credit rating of Vedanta Resources. This opinion considered the potential need for Volcan Investments to increase the dividends from Vedanta Resources post transaction, should Volcan Investments fund the transaction using debt. Moodys, in an Issuer Comment dated 5 July 2018, noted that the proposed delisting shall have no immediate impact on credit profile or rating as it expects that Volcan Investments will not extract incremental cash from Vedanta Resources for its liquidity requirements.

10.        Information relating to the Independent Committee

The Independent Committee consists of the members of Vedanta Resources' board of directors who are considered independent because they are neither appointees of, nor interested in any shares in, Volcan Investments. The members of the Independent Committee are Geoffrey Green, Deepak Parekh, Ravi Rajagopal, Edward Story and Katya Zotova.

11.        Gorey Investments Limited

Gorey Investments Limited ("Gorey") was established in 2010 as part of a share buy-back programme of Vedanta Resources. Under the terms of a purchase and nomination agreement dated 31 March 2010 entered into between Gorey and a subsidiary of Vedanta Resources, Vedanta Jersey Limited ("Vedanta Jersey"), Vedanta Jersey has been granted a right to direct Gorey to transfer some or all of the shares in Vedanta Resources which are beneficially owned by Gorey or its nominees to one or more third party transferees nominated by Vedanta Jersey.

Vedanta Resources shall procure that Vedanta Jersey submits a written nomination notice (the "Nomination Notice") to Gorey. The Nomination Notice will direct Gorey to transfer the 1,704,333 Vedanta Shares held by Gorey (the "Gorey Shares") to Volcan Investments by way of acceptance of the Offer within 10 days of the publication of the Offer Document. The Gorey Shares represent 0.6 per cent. of Vedanta Shares in issue as at 30 July 2018 (being the latest practicable date prior to the publication of this announcement).

12.        Interests in Vedanta Shares

Volcan Investments made a public Opening Position Disclosure in respect of the interests in the relevant securities of Vedanta Resources held by Volcan Investments and its concert parties on 16 July 2018 (the "Volcan Investments OPD").

As set out in the Volcan Investments OPD, 187,488,102 Vedanta Shares are held by Volcan Investments, representing approximately 66.52 per cent. of Vedanta Shares in issue as at 30 July 2018 (being the latest practicable date prior to the  publication of this announcement).

As at 30 July 2018, being the latest practicable date prior to the publication of this announcement, the following persons (each of whom is deemed to be acting in concert with Volcan Investments for the purposes of the Takeover Code) held an interest in relevant Vedanta Resources securities:

(A) Interests in Ordinary Shares

Name

Number of Ordinary Shares

% of total issued share capital (excluding treasury shares)

Anil Agarwal

319,464

0.11

Navin Agarwal

315,666

0.11

Agnivesh Agarwal

41,154

0.01

Pravin Agarwal

25,000

0.01

Pratik Agarwal

5,000

0.00

Annanya Agarwal

17,640

0.01

Naivedya Agarwal

17,006

0.01

Ruchira Agarwal

17,014

0.01

 

In addition to the above interests in ordinary shares, Anil Agarwal and Navin Agarwal are also interested in ordinary shares pursuant to the Vedanta Resources Deferred Share Bonus Plan ("DSBP"). These interests are forfeitable in certain circumstances.

Name

Nature of right

Number of Ordinary Shares

Anil Agarwal

Forfeitable share awards in the DSBP 2016

35,725

Forfeitable share awards in the DSBP 2017

85,861

Navin Agarwal

Forfeitable share awards in the DSBP 2015

18,109

Forfeitable share awards in the DSBP 2016

34,618

Forfeitable share awards in the DSBP 2017

47,563

 

(B) Rights to subscribe for Ordinary Shares

Anil Agarwal, Navin Agarwal and Agnivesh Agarwal have been granted options over Vedanta Shares under the Vedanta Resources Performance Share Plan ("PSP").  These options become exercisable in certain circumstances, subject to performance conditions being met.

Name

Nature of right

Number of Ordinary Shares

Anil Agarwal

Share options in the Vedanta Resources 2015 PSP

275,000

Share options in the PSP 2016

210,000

Share options in the PSP 2017

164,900

Navin Agarwal

Share options in the PSP 2015

130,000

Share options in the PSP 2016

125,000

Share options in the PSP 2017

113,300

Agnivesh Agarwal

Share options in the PSP 2015

55,000

 

Save as disclosed in this paragraph 12, as at 30 July 2018 (being the latest practicable date prior to the publication of this announcement) neither Volcan Investments nor, so far as Volcan Investments is aware, any person acting in concert (within the meaning of the Takeover Code) with Volcan Investments:

·        has any interest in, or right to subscribe for, any Vedanta Shares nor does any such person have any short position in Vedanta Shares, including any short position under a derivative, any agreement to sell, any delivery obligation or right to require another person to purchase or take delivery of Vedanta Shares; or

·           has borrowed or lent any Vedanta Shares; or

·          is party to any dealing arrangement of the kind referred to in Note 11 on the definition of acting in concert in the Takeover Code in relation to Vedanta Shares.

13.        Management, employees and locations

Volcan Investments attaches great importance to the skills, knowledge and expertise of the existing management and employees of Vedanta Resources and the Vedanta Group and confirms that it does not have any intention to reduce headcount at Vedanta Resources or any of its subsidiaries. Cancellation of the listing of the Vedanta Shares would reduce the requirement for certain administrative functions associated with the public listing of Vedanta Resources and therefore may result in changes to the conditions of employment or skills and functions of certain Vedanta Resources employees. Save for any changes associated with the cancellation of the listing of the Vedanta Shares, Volcan Investments does not intend to make any changes to the conditions of employment or skills and functions of the employees of the Vedanta Group.

Volcan Investments confirms that it intends to safeguard fully the existing employment and pension rights of the management and employees of Vedanta Resources in accordance with applicable law and that it does not intend to make any changes with regard to employer contributions into Vedanta Resources' existing pension schemes or the accrual of benefits to existing members or the admission of new members to such pension schemes. Vedanta Resources does not have any defined benefit pension obligations.

Volcan Investments does not anticipate that the service contracts of any member of the board of Vedanta Resources (including those held by members of the Independent Committee) will be terminated or amended following completion of the transaction. Further information will be provided in the Offer Document.

Volcan Investments will continue to apply and uphold the high health and safety standards as previously implemented across the Vedanta Group.

Volcan Investments has no intention to make any other changes with respect to the redeployment of Vedanta Resources' existing fixed assets. Vedanta Resource has no research and development functions.

Volcan Investments has no intention to change the strategic direction of the Vedanta Group and consequently has no intention to change Vedanta Resources' headquarters and locations of business.

14.        Vedanta Share Plans

Participants in the Vedanta Share Plans will be contacted regarding the effect of the Offer on their rights under these schemes and appropriate proposals will be made and communicated to such participants in due course.

15.        Global Depositary Receipts

Volcan Investments is offering to purchase all Vedanta Shares, including those underlying and represented by Vedanta GDRs. Vedanta GDR Holders will be notified on how to participate in the Offer in due course. 

16.        Squeeze out, delisting, cancellation of trading and re-registration

If the Offer becomes or is declared unconditional in all respects and if Volcan Investments has: (i) by virtue of its shareholdings and acceptances of the Offer acquired, or agreed to acquire, Vedanta Shares representing at least 75 per cent. of the voting rights of Vedanta Resources; and (ii) obtained acceptances of the Offer or has acquired, or agreed to acquire, Vedanta Shares from Independent Vedanta Shareholders that represent a majority of the voting rights held by the Independent Vedanta Shareholders on the date of this announcement (the "Delisting Threshold"), Volcan Investments intends to procure that Vedanta Resources will make an application for the cancellation of the listing of its shares on the Official List ("Official List") of the Financial Conduct Authority ("FCA") and for the cancellation of their admission to trading on the London Stock Exchange's main market for listed securities. It is anticipated that the cancellation of the listing on the Official List and the cancellation of the admission to trading on the London Stock Exchange's main market for listed securities will take effect no earlier than 20 Business Days after the date on which the Offer becomes, or is declared unconditional in all respects provided that Volcan Investments has attained the Delisting Threshold. Delisting would significantly reduce the liquidity and marketability of any Vedanta Shares not assented to the Offer. It is noted that Volcan Investments has received confirmations in a form satisfactory to it that Vedanta Resources' existing lenders will waive the obligation to repay its existing facilities upon delisting of Vedanta Resources.

As at the date of this announcement, Volcan Investments and its concert parties hold 188,467,922 Vedanta Shares representing approximately 66.87 per cent. of Vedanta Resources' total issued share capital. Based on the current interests of Volcan Investments and its concert parties, it is expected that the Delisting Threshold will be met if and when Volcan Investments and its concert parties hold or Volcan Investments has received valid acceptances in respect of the Offer relating to, in aggregate, approximately 83 per cent. of the issued share capital of Vedanta Resources.

Following the Offer becoming or being declared unconditional in all respects and the Vedanta Shares having been de-listed, Volcan Investments may procure that Vedanta Resources be re-registered as a private company.

If Volcan Investments acquires, whether through acceptances under the Offer or otherwise, 90 per cent. or more of the Vedanta Shares to which the Offer relates and the Offer becomes or is declared unconditional in all respects, Volcan Investments intends to exercise its rights pursuant to the provisions of Chapter 3 of Part 28 of the 2006 Act to acquire compulsorily the remaining Vedanta Shares in respect of which it has not received acceptances of the Offer on the same terms as the Offer.

The Offer will become or be declared unconditional in all respects only if all Conditions to the Offer have been satisfied or, where applicable, waived. Subject to the satisfaction or, where applicable, waiver of the Conditions, it is expected that completion of the Offer will occur in Q4 2018.

17.        Consents

J.P. Morgan Cazenove, Credit Suisse and Lazard have each given and not withdrawn their consent to the publication of this announcement with the inclusion herein of the references to their names, and, in the case of Lazard, the inclusion of its advice to the Independent Committee, in each case in the form and context in which they appear.

18.        Documents

Copies of the following documents will, by no later than noon on the Business Day following the date of this announcement, be available on Vedanta Resources' website at www.vedantaresources.com/investor-relations/volcan-offer, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, and respectively:

(a)      this announcement;

(b)      the Facility Agreement described at paragraph 4 above; and

(c)       the financial adviser consent letters described at paragraph 17 above.

The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

19.        General

The Offer will be on the terms and subject to the Conditions set out in this announcement and in Appendix 1, and the full terms to be set out in the Offer Document and Form of Acceptance when issued. The formal Offer Document and Form of Acceptance will be sent to Vedanta Shareholders and, for information purposes, to persons with information rights in due course. In deciding whether or not to assent their Vedanta Shares to the Offer, Vedanta Shareholders should consider the information contained in, and the procedures described in such documentation.

The bases and sources of certain information contained in this announcement are set out in Appendix 2. Certain terms used in this announcement are defined in Appendix 3.

The Offer will be governed by English law and will be subject to the courts of England and Wales and also to the applicable requirements of the Panel.

This announcement does not constitute an offer or an invitation to purchase or subscribe for any securities.

The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the local jurisdictions in which they reside. Such persons should inform themselves about and observe any applicable requirements.

The Offer will not be communicated, directly or indirectly, in or into or by the use of the mails of, or any means or instrumentality (including, but not limited to, by mail, telephonically or electronically by way of internet or otherwise) of interstate or foreign commerce of, or of any facilities of a national, state or other securities exchange of, the United States or any area subject to its jurisdiction or any political division thereof, nor is it being communicated into any other Restricted Jurisdiction, and the Offer will not be capable of acceptance by any such use, means, instrumentality or otherwise from within the United States or any other Restricted Jurisdiction. Accordingly, copies of this announcement are not being, and must not be, directly or indirectly, mailed or otherwise distributed or sent in, into or from the United States or any other Restricted Jurisdiction. Accordingly, persons receiving this announcement (including, without limitation, custodians, nominees and trustees) must not, directly or indirectly, distribute, mail or send it in, into or from the United States or any other Restricted Jurisdiction, and so doing may render any purported acceptance of the Offer invalid.

Enquiries:

Vedanta Resources Plc

Tel: +44 020 7499 5900

Arun Kumar

 

Viral Gathani

 

Rashmi Mohanty

 

 

 

Lazard & Co., Limited (financial adviser  and Rule 3 adviser to the Independent Committee)

Tel: +44 20 7187 2000

Spiro Youakim

 

William Lawes

 

Laurence Rehfeld

 

Fiona McHardy

 

 

 

J.P. Morgan Cazenove (lead financial adviser to Volcan Investments)

Tel: +44 207 742 4000

Charles Harman

 

Barry Weir

 

Jamie Riddell

 

James Robinson

 

 

 

Credit Suisse International (financial adviser to Volcan Investments)

Tel: + 44 207 888 8888

Mark Echlin

 

Joe Hannon

 

Emil Huseynov

 

Kush Nanjee

 

 

 

 

 

Finsbury (Public Relations Adviser to the Independent Committee)

Tel: +44 207 251 3801

Daniela Fleischmann

 

Humza Vanderman

 

 

 

 

Vedanta Resources LEI Number: 2138007MYEKPEAZQTW83

 

Important Notice

This announcement is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Offer or otherwise, nor shall there be any sale, issuance or transfer of securities of Vedanta Resources in any jurisdiction in contravention of applicable law.

The Offer will be made solely by means of the Offer Document and, in respect of Vedanta Shares held in certificated form, the Form of Acceptance accompanying the Offer Document, which will contain the full terms and conditions of the Offer including details of how to accept the Offer. Any approval, acceptance, decision or other response to the Offer should be made only on the basis of the information in the Offer Document and, in respect of Vedanta Shares held in certificated form, the Form of Acceptance. Vedanta Shareholders are strongly advised to read the formal documentation in relation to the Offer once it has been despatched.

J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") which is authorised in the United Kingdom by the PRA and regulated in the United Kingdom by the PRA and the FCA, is acting as financial adviser exclusively for Volcan Investments and no one else in connection with the Offer and will not regard any other person as its client in relation to the Offer and will not be responsible to anyone other than Volcan Investments for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for providing advice in connection with the Offer or any matter referred to herein.

Credit Suisse International ("Credit Suisse"), which is authorised by the PRA and regulated by the FCA and the PRA in the United Kingdom, is acting as financial adviser exclusively for Volcan Investments and no one else in connection with the matters set out in this announcement and will not be responsible to any person other than Volcan Investments for providing the protections afforded to clients of Credit Suisse, nor for providing advice in relation to the content of this announcement or any matter referred to herein. Neither Credit Suisse nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Credit Suisse in connection with this announcement, any statement contained herein or otherwise.

Lazard & Co., Limited ("Lazard"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively as financial adviser to the Independent Committee and no one else in connection with the Offer and will not be responsible to anyone other than the Independent Committee for providing the protections afforded to clients of Lazard nor for providing advice in relation to the Offer or any other matters referred to in this announcement. Neither Lazard nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard in connection with this announcement, any statement contained herein or otherwise.

Overseas Jurisdictions

This announcement has been prepared in accordance with English law and the Takeover Code and the information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England. The statements contained in this announcement are made as at the date of this announcement, unless some other time is specified in relation to them, and there shall be no implication that there has been no change in the facts set forth in this announcement since such date.

The release, publication or distribution of this announcement and the availability of the Offer in or into jurisdictions other than the United Kingdom may be affected by the laws and regulations of those jurisdictions. Persons who are not resident in the United Kingdom, or who are subject to the laws of any jurisdiction other than the United Kingdom, should inform themselves about, and observe any applicable requirements. Any person (including, without limitation, nominees, trustees and custodians) who would, or otherwise intends to, forward this announcement, the Offer Document or any accompanying document to any jurisdiction outside the United Kingdom should refrain from doing so and seek appropriate professional advice before taking any action. Any failure to comply with the applicable legal or regulatory requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Offer disclaim any responsibility and liability for the violation of such restrictions by any person. Further details in relation to Overseas Shareholders will be contained in the Offer Document.

The Offer will not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, telephonic or electronic) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, a Restricted Jurisdiction, and no person may accept the Offer by any such use, means, instrumentality or facility or from within a Restricted Jurisdiction. Accordingly, copies of this announcement and the formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded or distributed in, into or from a Restricted Jurisdiction and persons receiving this announcement (including custodians, nominees and trustees) must not distribute or send it into or from a Restricted Jurisdiction.

Important information for US shareholders

Vedanta Resources is a public limited company incorporated in England. The Offer will be made to Vedanta Shareholders in the United States in compliance with the applicable US tender offer rules under the US Securities Exchange Act of 1934, as amended (the "US Exchange Act"), including Regulation 14E thereunder, and securities laws and otherwise in accordance with the requirements of English law, the Takeover Code, the Panel, the London Stock Exchange and the FCA. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, the offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer law and practice. Vedanta Resources' financial information, including any included in the offer documentation, will not have been prepared in accordance with US generally accepted accounting principles, or derived therefrom, and may therefore differ from, and not be comparable with, financial information of US companies. The Offer will be made in the United States by Volcan Investments and no one else.

Neither the US Securities Exchange Commission nor any US state securities commission has approved or disapproved the Offer or passed upon the adequacy or completeness of this announcement. It may be difficult for US holders of Vedanta Resources securities to enforce their rights under any claim arising out of the US federal securities laws, since Volcan Investments and Vedanta Resources are located outside the United States, and some or all of their officers and directors may be resident outside the United States. US Vedanta Shareholders may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgement and a US court may lack jurisdiction over such persons.

The receipt of cash pursuant to the Offer may have tax consequences in the United States and under other applicable tax laws and such consequences, if any, are not described herein. US Vedanta Shareholders are urged to consult with their own legal, tax and financial advisers in connection with making a decision regarding the Offer.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th Business Day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website and hard copies

A copy of this announcement and the documents required to be published by Rule 26 of the Takeover Code will, by no later than 12 noon on the Business Day following the date of this announcement, be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Vedanta Resources' website at www.vedantaresources.com/investor-relations/volcan-offer. For the avoidance of doubt, the content of the website is not incorporated into and does not form part of this announcement.

Vedanta Shareholders may request a hard copy of this announcement by contacting  0370 707 1388 (from within the UK) or on +44 370 707 1388 (if calling from outside the UK) during business hours or by submitting a request in writing to Computershare at Computershare Investors Services PLC, The Pavilions, Bridgwater Road, Bristol BS13 8AE. If you have received this announcement in electronic form, copies of this announcement and any document or information incorporated by reference into this announcement will not be provided unless such a request is made.

 

 

appendix 1

CONDITIONS AND FURTHER TERMS OF THE OFFER

The Offer will comply with the applicable rules and regulations of the FCA, the London Stock Exchange and the Takeover Code, will be governed by English law and will be subject to the exclusive jurisdiction of the English courts. In addition it will be subject to the terms and conditions set out in the Offer Document and in respect of Vedanta Shares held in certificated form, the related Form of Acceptance.

1.          Conditions of the Offer

The Offer will be subject to the following Conditions:

(a)      Acceptance Condition

Valid acceptances of the Offer being received (and not, where permitted, withdrawn) by no later than 1.00 p.m. on the First Closing Date of the Offer (or such later time(s) and/or date(s) as Volcan Investments may, in accordance with the Takeover Code or with the consent of the Panel, decide) in respect of not less than 90 per cent. (or such lesser percentage as Volcan Investments may decide) of the Vedanta Shares to which the Offer relates and of the voting rights attached to those shares, provided that this condition will not be satisfied unless Volcan Investments shall hold or have acquired or agreed to acquire (whether pursuant to the Offer or otherwise), directly or indirectly, Vedanta Shares carrying in aggregate more than 50 per cent. of the voting rights then normally exercisable at the general meeting of Vedanta Resources, including for this purpose (except to the extent otherwise agreed by the Panel) any such voting rights attaching to Vedanta Shares that are unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise.

For the purposes of this condition:

(i)     Vedanta Shares which have been unconditionally allotted shall be deemed to carry the voting rights they will carry upon being entered into the register of members of Vedanta Resources;

(ii)     Vedanta Shares that cease to be held in treasury are Vedanta Shares to which the Offer relates;

(iii)    the expression "Vedanta Shares to which the Offer relates" shall be construed in accordance with Chapter 3 of Part 28 of the 2006 Act; and

(iv)     valid acceptances shall be deemed to have been received in respect of Vedanta Shares which are treated for the purposes of Part 28 of the 2006 Act as having been acquired or contracted to be acquired by Volcan Investments by virtue of acceptances of the Offer;

(b)      General conditions

Subject to the provisions of paragraph 2 below and the requirements of the Panel in accordance with the Takeover Code, the Offer will also be conditional upon the satisfaction or, where relevant, waiver of the following Conditions:

(c)       Other Third Party clearances

no Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or having required any action to be taken or otherwise having done anything or having enacted, made or proposed any statute, regulation, decision, order or change to published practice and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to:

(i)       make the Offer, its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider Vedanta Group by any member of the Wider Volcan Group void, illegal and/or unenforceable under the laws of any relevant jurisdiction, or otherwise directly or indirectly prevent, prohibit, or restrain, restrict, impede, challenge, delay or otherwise interfere with the implementation of, or impose additional conditions or obligations with respect to, the Offer or the acquisition of any shares or other securities in, or control or management of, any member of the Wider Vedanta Group by any member of the Wider Volcan Group or require amendment of the Offer;

(ii)    require, prevent or delay the divestiture or alter the terms envisaged for any proposed divestiture by any member of the Wider Volcan Group or by any member of the Wider Vedanta Group of all or any material part of their businesses, assets or property or impose any limitation on the ability of all or any of them to conduct their businesses (or any part thereof) or to own, control or manage any of their material assets or properties (or any part thereof);

(iii)    impose any limitation on, or result in a delay in, the ability of any member of the Wider Volcan Group directly or indirectly to acquire or hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in Vedanta Resources (or any member of the Wider Vedanta Group) or on the ability of any member of the Wider Vedanta Group or any member of the Wider Volcan Group directly or indirectly to hold or exercise effectively any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise management control over, any member of the Wider Vedanta Group;

(iv)     other than pursuant to the implementation of the Offer, require any member of the Wider Volcan Group or the Wider Vedanta Group to acquire or offer to acquire any shares, other securities (or the equivalent) or interest in any member of the Wider Vedanta Group owned by any third party;

(v)    require, prevent or delay a divestiture or alter the terms envisaged for any proposed divestiture by any member of the Wider Volcan Group of any shares or other securities (or the equivalent) in any member of the Wider Vedanta Group;

(vi)    result in any member of the Wider Vedanta Group ceasing to be able to carry on business under any name under which it presently carries on business;

(vii)   impose any material limitation on the ability of any member of the Wider Volcan Group or any member of the Wider Vedanta Group to conduct, integrate or co-ordinate all or any part of their respective businesses with all or any part of the business of any other member of the Wider Volcan Group and/or the Wider Vedanta Group in a manner which is materially adverse to the Wider Volcan Group and/or the Wider Vedanta Group, in either case, taken as a whole or in the context of the Offer;

(viii)  otherwise materially adversely affect any or all of the business, assets, value profits, prospects, operational performance, financial or trading position of any member of the Wider Vedanta Group or any member of the Wider Volcan Group;

and all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Offer or proposed acquisition of any Vedanta Shares or otherwise intervene having expired, lapsed, or been terminated;

(ix)   no undertakings or assurances being sought from Volcan Investments, any member of the Wider Volcan Group or any member of the Wider Vedanta Group by the Secretary of State or any other third party, except on terms satisfactory to Volcan Investments;

(x)     all notifications, filings or applications which are deemed by Volcan Investments (acting reasonably) to be necessary or appropriate having been made in connection with the Offer and all necessary waiting and other time periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with and all Authorisations which are deemed by Volcan Investments to be necessary or appropriate in any jurisdiction for or in respect of the Offer or the proposed acquisition of any shares or other securities in, or control of, Vedanta Resources by any member of the Wider Volcan Group having been obtained in terms and in a form satisfactory to Volcan Investments from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the Wider Vedanta Group or the Wider Volcan Group has entered into contractual arrangements and all such Authorisations which are deemed by Volcan Investments to be necessary or appropriate to carry on the business of any member of the Wider Vedanta Group in any jurisdiction having been obtained in each case where the direct consequence of a failure to make such notification or filing or to wait for the expiry, lapse or termination of any such waiting or other time period or to comply with such obligation would be unlawful in any relevant jurisdiction or have a materially adverse effect on the Wider Vedanta Group, any member of the Volcan Group or the ability of Volcan Investments to implement the Offer and all such Authorisations remaining in full force and effect at the time at which the Offer becomes otherwise unconditional in all respects and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;

(xi)   no temporary restraining order, preliminary or permanent injunction, preliminary or permanent enjoinment, or other order threatened or issued and being in effect by a court or other Third Party which has the effect of making the Offer or any acquisition or proposed acquisition of any shares or other securities or control or management of, any member of the Wider Vedanta Group by any member of the Wider Volcan Group, or the implementation of either of them, void, voidable, illegal and/or enforceable under the laws of any relevant jurisdiction, or otherwise directly or indirectly prohibiting, preventing, restraining, restricting, delaying or otherwise interfering with the consummation or the approval of the Offer or any matter arising from the proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider Vedanta Group by any member of the Wider Volcan Group;

(d)      Confirmation of absence of adverse circumstances

(i)     except as Disclosed, there being no provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any member of the Wider Vedanta Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or be subject or any event or circumstance which, as a consequence of the Offer or the proposed acquisition by any member of the Wider Volcan Group of any shares or other securities in Vedanta Resources or because of a change in the control or management of any member of the Wider Vedanta Group or otherwise, would or might reasonably be expected to result in:

(A)   any monies borrowed by, or any other indebtedness, actual or contingent of, or any grant available to, any member of the Wider Vedanta Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(B)      the rights, liabilities, obligations, interests or business of any member of the Wider Vedanta Group or any member of the Wider Volcan Group under any such arrangement, agreement, licence, permit, lease or instrument or the interests or business of any member of the Wider Vedanta Group or any member of the Wider Volcan Group in or with any other firm or company or body or person (or any agreement or arrangement relating to any such business or interests) being or likely to become terminated or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken or arising thereunder;

(C)     any member of the Wider Vedanta Group ceasing to be able to carry on business under any name under which it presently carries on business;

(D)    any assets or interests of, or any asset the use of which is enjoyed by, any member of the Wider Vedanta Group being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged or could cease to be available to any member of the Wider Vedanta Group otherwise than in the ordinary course of business;

(E)    the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider Vedanta Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen), becoming enforceable;

(F)    the business, assets, value, financial or trading position, profits, prospects or operational performance of any member of the Wider Vedanta Group being prejudiced or adversely affected;

(G)      the creation or acceleration of any liability (actual or contingent) by any member of the Wider Vedanta Group other than trade creditors or other liabilities incurred in the ordinary course of business; or

(H)    any liability of any member of the Wider Vedanta Group to make any severance, termination, bonus or other payment to any of its directors or other officers;

(e)      No material transactions, claims or changes in the conduct of the business of the Vedanta Group

(i)       except as Disclosed no member of the Wider Vedanta Group having since 31 March 2018:

(A)    save for the issue or transfer out of treasury of Vedanta Shares on the exercise of options or vesting of awards granted before the date of this announcement in the ordinary course, issued or agreed to issue or authorised or proposed or announced its intention to authorise or propose the issue of additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities or transferred or sold or agreed to transfer or sell or authorised or proposed the transfer or sale of Vedanta Shares out of treasury;

(B)     save for the FY2018 Dividend, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise) other than to Vedanta Resources or one of its wholly owned subsidiaries;

(C)     save as between Vedanta Resources and its wholly owned subsidiaries or between such wholly owned subsidiaries, merged with (by statutory merger or otherwise) or demerged from or acquired any body corporate, partnership or business or acquired or disposed of, or, other than in the ordinary course of business, transferred, mortgaged or charged or created any security interest over, any material assets or any right, title or interest in any material asset (including shares and trade investments) or authorised, proposed or announced any intention to do so;

(D)    made, authorised, proposed or announced an intention to propose any change in its loan capital;

(E)      issued, authorised or proposed or announced an intention to authorise or propose the issue of, or made any change in or to the terms of, any debentures or (save as between Vedanta Resources and its wholly owned subsidiaries or between such wholly owned subsidiaries) incurred or increased any indebtedness or become subject to any contingent liability;

(F)      entered into, varied, authorised or proposed entry into or variation of, or announced its intention to enter into or vary, any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) (otherwise than in the ordinary course of business) which is of a long term, unusual or onerous nature, or which involves or could reasonably be expected to involve an obligation of a nature which is, in any such case, material in the context of the Vedanta Group or in the context of the Offer, or which is or is likely to be materially restrictive on the business of any member of the Wider Vedanta Group or which is or is likely to be materially restrictive on the business of any member of the Wider Volcan Group;

(G)    entered into any licence or other disposal of intellectual property rights of any member of the Wider Vedanta Group which are material in the context of the Wider Vedanta Group and outside the normal course of business;

(H)     entered into, varied, authorised or proposed entry into or variation of, or announced its intention to enter into or vary the terms of or made any offer (which remains open for acceptance) to enter into or vary the terms of, any contract, commitment, arrangement or any service agreement with any director or, except for salary increases, bonuses or variations of terms in the ordinary course, senior executive of the Wider Vedanta Group;

(I)     proposed, agreed to provide or modified the terms of any share plan, incentive scheme, or other benefit relating to the employment or termination of employment of any employee of the Wider Vedanta Group which is material in the context of the Wider Vedanta Group taken as a whole;

(J)    procured the trustees of the relevant pension scheme, or any such trustees having taken any action since 31 March 2018, to (I) propose, make or agree to any significant change to: (a) the terms of the trust deeds, rules, policy or other governing documents constituting any pension scheme or other retirement or death benefit arrangement established for the directors, former directors, employees or former employees of any entity in the Wider Vedanta Group or their dependants (a "Relevant Pension Plan"); (b) the basis on which benefits accrue, pensions which are payable or the persons entitled to accrue or be paid benefits, under any Relevant Pension Plan; (c) the basis on which the liabilities of any Relevant Pension Plan are funded or valued; (d) the manner in which the assets of any Relevant Pension Plan are invested; (e) the basis or rate of employer contribution to a Relevant Pension Plan; or (II) enter into or propose to enter into one or more bulk annuity contracts in relation to any Relevant Pension Plan; or (III) carry out any act: (a) which would or could reasonably be expected to lead to the commencement of the winding up of any Relevant Pension Plan; (b) which would or might create a material debt owed by an employer to any Relevant Pension Plan; (c) which would or might accelerate any obligation on any employer to fund or pay additional contributions to any Relevant Pension Plan; or (d) which would or might give rise directly or indirectly to a liability in respect of a Relevant Pension Plan arising out of the operation of sections 38 to 56 inclusive of the Pensions Act 2004 in relation to the scheme;

(K)    changed the trustee or trustee directors or other fiduciary of any Relevant Pension Plan;

(L)  entered into, implemented or effected, or authorised, proposed or announced its intention to implement or effect, any joint venture, asset or profit sharing arrangement, partnership, composition, assignment, reconstruction, amalgamation, commitment, scheme or other transaction or arrangement (other than the Offer) otherwise than in the ordinary course of business;

(M)   purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

(N)    waived, compromised or settled any claim which is material in the context of the Wider Vedanta Group taken as a whole otherwise than in the ordinary course of business;

(O)  made any material alteration to its articles of association or other constitutional documents;

(P)     (other than in respect of a member which is dormant and was solvent at the relevant time) taken or proposed any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding up (voluntary or otherwise), dissolution, reorganisation or for the appointment of any administrator, receiver, manager, administrative receiver, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed;

(Q)    been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(R)    entered into any contract, commitment, agreement or arrangement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this condition;

(S)    terminated or varied the terms of any agreement or arrangement between any member of the Wider Vedanta Group and any other person in a manner which would or might be expected to have a material adverse effect on the financial position of the Vedanta Group taken as a whole; or

(T)      having taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel or the approval of Vedanta Shareholders in general meeting in accordance with, or as contemplated by, Rule 21.1 of the Takeover Code;

(f)       No material adverse change

(i)       except as Disclosed since 31 March 2018:

(A)      there having been no adverse change and no circumstance having arisen which would be expected to result in any adverse change or deterioration in the business, assets, value, financial or trading position, profits or operational performance of any member of the Wider Vedanta Group to an extent which is material to the Vedanta Group taken as a whole or in the context of the Offer or in the obligations of any member of the Volcan Group in connection with the Offer;

(B)  no litigation, arbitration proceedings, prosecution or other legal proceedings having been threatened, announced or instituted by or against or remaining outstanding against any member of the Wider Vedanta Group or to which any member of the Wider Vedanta Group is or may become a party (whether as claimant or defendant or otherwise) and no enquiry, review, investigation or enforcement proceedings by, or complaint or reference to, any Third Party against or in respect of any member of the Wider Vedanta Group having been threatened, announced or instituted by or against, or remaining outstanding in respect of, any member of the Wider Vedanta Group in each case to an extent which is material to the Vedanta Group taken as a whole or in the context of the Offer;

(C)   no contingent or other liability having arisen, increased or become apparent which might be likely to adversely affect the business, assets, financial or trading position, profits, prospects or operational performance of any member of the Wider Vedanta Group to an extent which is material to the Vedanta Group taken as a whole or in the context of the Offer; and

(D)     no steps having been taken and no omissions having been made which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Vedanta Group, which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which is material and likely to have an adverse effect on the Vedanta Group taken as a whole or in the context of the Offer;

(ii)      except as Disclosed, since 31 March 2018 Volcan Investments not having discovered:

(A)    that any financial, business or other information concerning the Wider Vedanta Group publicly announced or disclosed to any member of the Wider Volcan Group at any time by or on behalf of any member of the Wider Vedanta Group or to any of their advisers is materially misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make that information not materially misleading;

(B)    that any member of the Wider Vedanta Group is subject to any actual or contingent liability which is material in the context of the Wider Volcan Group taken as a whole; or

(C)   any information which materially affects the import of any information disclosed to Volcan Investments at any time by or on behalf of any member of the Wider Vedanta Group;

(g)      Environmental liabilities

in relation to any release, emission, accumulation, discharge, disposal or other fact or circumstance which has impaired or is likely to impair the environment (including property) or harmed or is likely to harm the health of humans, animals or other living organisms or eco systems, no past or present member of the Wider Vedanta Group, in a manner or to an extent which is material in the context of the Vedanta Group, (i) having committed any violation of any applicable laws, statutes, regulations, Authorisations, notices or other requirements of any Third Party; and/or (ii) having incurred any liability (whether actual or contingent) to any Third Party; and/or (iii) being likely to incur any liability (whether actual or contingent), or being required, to make good, remediate, repair, re instate or clean up the environment (including any property);

(h)      Anti-corruption, sanctions and criminal property

except as Disclosed, since 31 March 2018 Volcan Investments not having discovered:

(i)       any:

(A) past or present member, director, officer or employee of the Wider Vedanta Group; or

(B) person that performs or has performed services on behalf of the Wider Vedanta Group,

has at any time engaged in an activity, practice or conduct which would constitute an offence under the UK Bribery Act 2010, the US Foreign Practices Act of 1977 or any other applicable anti-corruption legislation;

(ii)    any member of the Wider Vedanta Group is ineligible to be awarded any contract or business under section 23 of the Public Contracts Regulations 2006 or section 26 of the Utilities Contracts Regulations 2006 (each as amended);

(iii)   any asset of any member of the Wider Vedanta Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition);

(iv)     any past or present member, director, officer or employee of the Wider Vedanta Group, or any other person for whom any such person may be liable or responsible, has engaged in any business with, made any investments in, or made any payments or assets available to or received any funds or asset from:

(A) any government, entity, or individual with which US or European Union persons (or persons operating in those territories) are prohibited from engaging in activities, doing business or from receiving or making available funds or economic resources, by US or European Union laws or regulations, including the economic sanctions administered by the United States Office of Foreign Assets Control or HM Treasury & Customs; or

(B) any government, entity or individual targeted by any of the economic sanctions of the United Nations, United States or the European Union or any of its member states; or

(v)      a member of the Wider Vedanta Group has engaged in any behaviour which would cause the Volcan Group to be in breach of any law or regulation on completion of the Offer, including the economic sanctions administered by the United States Office of Foreign Assets Control, HM Treasury & Customs or any government, entity or individual targeted by any of the economic sanctions of the United Nations, United States or the European Union or any of its member states.

(vi)     any past or present member of the Wider Vedanta Group or any person that performs or has performed services for or on behalf of any such company is or has at any time engaged in any activity, practice or conduct (or omitted to take any action) in contravention of the UK Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977, as amended or any other applicable anti-corruption legislation;

(vii)   any member of the Wider Vedanta Group is ineligible to be awarded any contract or business under section 23 of the Public Contracts Regulations 2006 or section 26 of the Utilities Contracts Regulations 2006 (each as amended);

(viii)    any past or present member of the Wider Vedanta Group has engaged in any activity or business with, or made any investments in, or made any payments to any government, entity or individual covered by any of the economic sanctions administered by the United Nations or the European Union (or any of their respective member states) or the United States Office of Foreign Assets Control or any other governmental or supranational body or authority in any jurisdiction.

For the purpose of these Conditions:

(a) "Third Party" means any central bank, government, government department or governmental, quasigovernmental, supranational, statutory, regulatory, environmental or investigative body, authority, court, trade agency, association, institution or professional or environmental body in any relevant jurisdiction, including, for the avoidance of doubt, the Panel; and

(b) a Third Party shall be regarded as having "intervened" if it has given notice to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or made, proposed or enacted any statute, regulation, decision or order or taken any measures or other steps or required any action to be taken or information to be provided or otherwise having done anything and "intervene" shall be construed accordingly.

2.          Waiver of Conditions

Subject to the requirements of the Panel, Volcan Investments reserves the right in its sole discretion to waive (if capable of waiver) in whole or in part Conditions 1(b) to (h).

Conditions 1(b) to (h) inclusive must be satisfied as at, or (if capable of waiver) waived on or before, midnight on the 21st calendar day after the later of the First Closing Date of the Offer and the date on which condition (a) is fulfilled (or, in each case, such later date as the Panel may agree), failing which the Offer will lapse. Volcan Investments shall be under no obligation to waive (if capable of waiver) or determine to be, or treat as, satisfied, any of conditions 1(b) to (h) inclusive by a date earlier than the latest date specified above for the satisfaction thereof notwithstanding that the other conditions of the Offer may at such earlier date have been waived or satisfied and that there are, at such earlier date, no circumstances indicating that any of such conditions may not be capable of satisfaction. In any event, all of the conditions to the Offer must be satisfied as at, or (if capable of waiver) waived on or before, midnight on the 81st day following the date on which the Offer Document is published or such other date as may be agreed with the Panel.

3.          Further Terms of the Offer

The Offer will lapse if the European Commission either initiates proceedings under Article 6(1)(c) of Council Regulation (EC) 139/2004 or makes a referral to a competent authority of the United Kingdom under Article 9(3)(b) of that Regulation and there is a subsequent Phase 2 CMA Reference, in either case before 1.00 p.m. on the First Closing Date of the Offer or the date on which the Offer becomes or is declared unconditional as to acceptances, whichever is the later. If the Offer so lapses, the Offer will cease to be capable of further acceptance and accepting Vedanta Shareholders and Volcan Investments will cease to be bound by forms of acceptance submitted before the time when the Offer lapses.

Volcan Investments reserves the right to elect with the agreement of Vedanta Resources and the consent of the Panel (where necessary), to implement the acquisition of Vedanta Resources by way of a court approved scheme of arrangement in accordance with Part 26 of the 2006 Act. In such event, the acquisition will be implemented on substantially the same terms, subject to appropriate amendments, as those which would apply to the Offer.

Under Rule 13.5(a) of the Takeover Code, Volcan Investments may not invoke a Condition so as to cause the Offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the Condition are of material significance to Volcan Investments in the context of the Offer. Condition 1(a) is not subject to this provision of the Takeover Code.

The Offer will be subject, inter alia, to the Conditions and certain further terms which are set out in this Appendix 1 and those terms which will be set out in the Offer Document and such further terms as may be required to comply with the provisions of the Listing Rules and the provisions of the Takeover Code.

Vedanta Shares will be acquired by Volcan Investments fully paid and free from all liens, equitable interests, charges, encumbrances and other third party rights of any nature whatsoever and together with all rights attaching to them, including the right to receive and retain all dividends and distributions (if any) declared, made or paid after the date of this announcement (other than the FY2018 Dividend). If after the date of this announcement and prior to the Offer becoming or being declared unconditional in all respects, any dividend and/or other distribution and/or other return of value is declared, made or paid in respect of Vedanta Shares (other than the FY2018 Dividend), Volcan Investments shall be entitled to reduce the amount of consideration payable for each such Vedanta Shares under the terms of the Offer by an amount equivalent to the amount of such dividend, other distribution or return of value paid in each such Vedanta Share.

Any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements. Further information in relation to Overseas Shareholders will be contained in the Offer Document.

Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

The Offer will be governed by English law and be subject to the jurisdiction of the English courts and to the Conditions set out above.

 

 

 

 

appendix 2

SOURCES AND BASES OF INFORMATION

Unless otherwise stated in this announcement:

1.       references to the existing issued share capital of Vedanta Resources are to the number of Vedanta Shares in issue as at 30 July 2018, being the latest practicable date prior to the publication of this announcement, which was 281,850,158 Vedanta Shares. The international securities identification number for the Vedanta Shares is GB0033277061;

2.      unless otherwise stated, the financial information relating to Vedanta Resources is extracted from the audited consolidated financial statements of Vedanta Resources for the relevant years, prepared in accordance with IFRS;

3.      where amounts are shown in both US dollars and £ sterling in this document, £:US$ exchange rates as per FactSet of 1.3203 and 1.3147 as of 29 June 2018 and 30 July 2018 respectively have been used;

4.        unless otherwise stated, all prices for Vedanta Resources have been derived from the Daily Official List and represent Closing Prices on the relevant date(s);

5.      the three-month volume weighted average price per Vedanta Share of 727 pence from 30 March 2018 until 29 June 2018 is derived from data provided by FactSet;

6.      Vedanta Resources' FY2018 EBITDA per commodity has been sourced from Vedanta Resources' 2018 preliminary results. See page 18 of Vedanta Resources' 2018 preliminary results; and

7.      The prices for commodities that the Vedanta Group exploits, which includes zinc, oil, aluminium, iron, ore and copper, are derived from FactSet. 

 

 

appendix 3

DEFINITIONS

The following definitions apply throughout this document unless the context otherwise requires:

"2006 Act" means the Companies Act 2006, as amended from time to time;

"Announcement Exchange Rate" means the exchange rate of £1 : US$1.3203;

"Authorisations" means authorisations, orders, grants, recognitions, confirmations, consents, licences, clearances, certificates, permissions or approvals;

"Business Day" means a day, not being a public holiday, Saturday or Sunday, on which clearing banks in London are open for normal business;

"certificated" or "certificated form" means in relation to a share or other security, a share or other security title to which is recorded in the relevant register of the share or other security as being held in certificated form (that is, not in CREST);

"Closing Price" means the closing middle market price of a Vedanta Share as derived from the Daily Official List on any particular date;

"Conditions" means the conditions to the implementation of the Offer which are set out in Part 1 of Appendix 1 to this announcement and to be set out in the Offer Document;

"Credit Suisse" means Credit Suisse International;

"CREST" means the relevant system (as defined in the Regulations) in respect of which Euroclear is the operator (as defined in CREST);

"Daily Official List" means the daily official list of the London Stock Exchange;

"Deposit Agreement" means the deposit agreement dated 2 February 2006 among The Bank of New York Mellon as the depositary, Vedanta Resources and the owners and holders of GDRs from time to time under which the GDRs are issued;

"Disclosed" means information which has been fairly disclosed:

·               by Vedanta Resources in its published annual report and accounts for the period ended 31 March 2018;

·               in any public announcement made by, or on behalf of, Vedanta Resources prior to the date of this announcement via a Regulatory Information Service;

·               in this announcement; or

·               in writing by, or on behalf of, Vedanta Resources to Volcan Investments (or their respective officers, advisers, employees or agents) prior to the date of this announcement;

"Euroclear" means Euroclear UK & Ireland Limited;

"FCA" means Financial Conduct Authority or its successor from time to time;

"FCA Handbook" means the FCA's Handbook of rules and guidance as amended from time to time;

"First Closing Date" means the date which is 20 US business days after the date of posting of the Offer Document;

"Form of Acceptance" means the Form of Acceptance, Authority and Election for use by Vedanta Shareholders in connection with the Offer;

"FSMA" means the Financial Services and Markets Act 2000 (as amended from time to time);

"FY2018 Dividend" means the interim dividend of US$0.41 per Vedanta Share (30.47 pence at a fixed exchange rate of £0.7431 per US dollar) in respect of the twelve months ended 31 March 2018 announced by the Vedanta Resources board of directors on 23 May 2018 and confirmed by Vedanta Resources on 17 July 2018 for payment on 22 August 2018 in respect of those shareholders on Vedanta Resources' share register as an interim dividend on 20 July 2018;

"GDRs" means the global depositary receipts admitted to trading on the Luxembourg Stock Exchange (International Securities Identification Number: US92241T1025). One GDR represents one Vedanta Share;

"IFRS" means international accounting standards and international financial reporting standards and interpretations thereof, approved or published by the International Accounting Standards Board and adopted by the European Union;

"Independent Committee" means the Independent Committee of the Board of Vedanta Resources;

"Independent Vedanta Shareholders" means holders of Vedanta Shares other than Volcan Investments, any person acting in concert with Volcan Investments;

"Indian Stock Exchanges" means the Bombay Stock Exchange and the National Stock Exchange;

"J.P. Morgan Cazenove" means J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove);

"Lazard" means Lazard & Co., Limited;

"Listing Rules" means the listing rules, made by the FCA under Part 6 FSMA, as amended from time to time;

"London Stock Exchange" means the London Stock Exchange plc or its successor;

"Offer" means the recommended offer made by Volcan Investments to acquire all the Vedanta Shares held by Independent Vedanta Shareholders on the terms and subject to the conditions set out in the Offer Document and the Form of Acceptance including, where the context so requires, any subsequent revision, variation, extension or renewal of such offer and includes any election available in connection with it;

"Offer Document" means the document containing and setting out the terms and conditions of the Offer;

"Offer Period" means the period commencing on (and including 2 July 2018) and ending on whichever of the following dates shall be the latest: (i) 1.00 p.m. on the First Closing Date; (ii) the date on which the Offer lapses or is withdrawn in accordance with its terms; and (iii) the date on which the Offer becomes or is declared unconditional as to acceptances;

"Official List" means the Official List of the FCA;

"Overseas Shareholders" means Vedanta Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom;

"Panel" means the Panel on Takeovers and Mergers;

"Possible Offer Announcement" means the possible offer announcement released by Vedanta Resources and Volcan Investments on 2 July 2018;

"pounds sterling", "£ sterling", "GBP", "£" or "pence" means the lawful currency of the United Kingdom;

"Regulations" means the Uncertificated Securities Regulations 2001;

"Regulatory Information Service" means a regulatory information service as defined in the FCA Handbook;

"relevant securities" means Vedanta Shares, other Vedanta Resources share capital and any securities convertible into or exchangeable for, and rights to subscribe for, any of the foregoing;

"Restricted Jurisdiction" means any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Offer is sent or made available to Vedanta Shareholders in that jurisdiction;

"Standard Chartered" means Standard Chartered Bank;

"S&P" means Standard & Poor's Financial Services LLC;

 

"subsidiary", "subsidiary undertaking" and "undertaking" shall be construed in accordance with the 2006 Act;

"Takeover Code" means the Takeover Code issued by the Panel on Takeovers and Mergers, as amended from time to time;

"The Bahamas" means the Commonwealth of the Bahamas;

"UK" or "United Kingdom" means United Kingdom of Great Britain and Northern Ireland;

"uncertificated" or "in uncertificated form" means a share or other security title to which is recorded in the relevant register of the share or security as being held in uncertificated form, in CREST, and title to which, by virtue of the Regulations may be transferred by means of CREST;

"United States" or "US" means the United States of America, its territories and possessions, any state of the United States and the District of Columbia

"US Exchange Act" means the US Securities Exchange Act of 1934, as amended;

"US$" or "US dollars" means the lawful currency of the United States;

"Vedanta Resources" means Vedanta Resources Plc;

"Vedanta GDR Holder" means a holder of GDRs;

"Vedanta GDRs" means the GDRs, each evidencing one Vedanta Share";

"Vedanta Group" means Vedanta Resources and its subsidiary undertakings and where the context permits, each of them;

"Vedanta Shareholder(s)" means holders of Vedanta Shares which, as the context requires, includes Vedanta GDR Holders;

"Vedanta Share Plans" means the Vedanta Resources Deferred Share Bonus Plan, adopted on 13 May 2015, and the Vedanta Resources Performance Share Plan 2014, adopted on 12 November 2014;

"Vedanta Share(s)" means the existing unconditionally allotted or issued and fully paid ordinary shares of US$0.10 each in the capital of Vedanta Resources and any further shares which are unconditionally allotted or issued before the date on which the Offer closes (or such earlier date or dates, not being earlier than the date on which the Offer becomes unconditional as to acceptances or, if later, the First Closing Date of the Offer, as Volcan Investments may decide) including the GDRs but excluding any such shares held or which become held in treasury;

"Volcan Cyprus" means Volcan Investment Cyprus Ltd, a wholly owned subsidiary of Volcan Investments incorporated under the laws of Cyprus;

"Volcan Group" means Volcan Investments, Volcan Cyprus and its subsidiary undertakings and where the context permits, each of them;

"Volcan Investments" Volcan Investments Limited;

"Wider Vedanta Group" means Vedanta Resources and associated undertakings and any other body corporate, partnership, joint venture or person in which Vedanta Resources and such undertakings (aggregating their interests) have an interest of more than 20 per cent. of the voting equity capital or the equivalent; and

"Wider Volcan Group" means Volcan Group and associated undertakings and any other body corporate, partnership, joint venture or person in which Volcan Investments and such undertakings (aggregating their interests) have an interest of more than 20 per cent. of the voting equity capital or the equivalent.

All times referred to are London time unless otherwise stated.

 


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