Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Completion of Acquisition of a Controlling Stake in
Cairn India Ltd.
8 December 2011
Cautionary Statement and Disclaimer
The views expressed here may contain information derived from publicly available sourc...
Highlights
Acquired 58.5% of Cairn India Ltd. for a total consideration of $8.67bn
− Acquisition completed on 8 December 2...
EBITDA Growth and Diversification
H1 FY2011

Power
2%
Iron Ore
32%

Proforma H1 FY2012
with Cairn India

H1 FY2012

Alumin...
Cairn Acquisition Funding
Consideration

($bn)

20% stake acquired by Sesa Goa

2.88

38.5% stake acquired by Vedanta plc
...
Credit Metrics
Proforma 30 Sep 2011 (including Cairn) in $ mn

Debt

Cash and Liquid
Investments

Vedanta plc

9,127

178
...
Cairn India – A World Class Asset Base
Production Blocks

10 blocks in the Portfolio

Exploration Potential
Rajasthan

(RJ...
Financial Highlights
Price Realization (USD/boe)

Gross Production (Kbopd)

100

Q2 FY12

0

50

691

174

68

Q2 FY11

80...
Rajasthan Update
Mangala production ~125,000 bopd; reservoir
performance as per expectations

MPT

Produced and sold >60 m...
Rajasthan Royalty
Payable at 20% of the post well-head value of the crude oil produced (on an ex-royalty basis);
translate...
Rajasthan - Future Resource And Value Potential
~6.5 Billion boe

Gross
Initial
In Place
Volumes

~2.5 Billion boe in
35+ ...
Exploration Programme
Play based approach to building portfolio
Diversity of basin, plays and environments
Ongoing regiona...
Exploration - Sri Lanka Block (SL 2007-01-001)
Cairn Lanka 100% Working Interest (NOC
back-in 15%)
− Cairn India’s first o...
Summary
Immediately earnings accretive

World class asset and management team

Common operating philosophy – focus on deli...
Appendix
The Transaction

Description

Date

Sesa Goa

Vedanta plc

Total

Purchase from Petronas

19-Apr

10.4%

-

10.4%

Open Of...
Debt Maturity Profile
$5.9bn of cash and liquid investments as of 30 Sep

Debt Maturity Profile2
(in $bn)
Debt at Vedanta ...
Vedanta Group Structure
Vedanta Resources
(Listed on LSE)

79.4%

Konkola
Copper
Mines (KCM)

51.0%
Bharat
Aluminium
(BALC...
Upcoming SlideShare
Loading in …5
×

Vedanta Carin Deal - Acquisition of a Controlling stake in Cairn India Ltd

684 views

Published on

Vedanta Resources has acquired 58.5% stakes of Cairn India Ltd. for a total consideration of $8.67bn. The Acquisition completed on 8 December 2011. 38.5% held by Vedanta & 20% held by Sesa Goa.

Published in: Business
  • Be the first to comment

  • Be the first to like this

Vedanta Carin Deal - Acquisition of a Controlling stake in Cairn India Ltd

  1. 1. Completion of Acquisition of a Controlling Stake in Cairn India Ltd. 8 December 2011
  2. 2. Cautionary Statement and Disclaimer The views expressed here may contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness, reasonableness or reliability of this information. Any forward looking information in this presentation including, without limitation, any tables, charts and/or graphs, has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by Vedanta Resources plc ("Vedanta"). Past performance of Vedanta cannot be relied upon as a guide to future performance. This presentation contains 'forward-looking statements' – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,' 'seeks,' or 'will.' Forward– looking statements by their nature address matters that are, to different degrees, uncertain. For us, uncertainties arise from the behaviour of financial and metals markets including the London Metal Exchange, fluctuations in interest and or exchange rates and metal prices; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a environmental, climatic, natural, political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different that those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. This presentation is not intended, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities in Vedanta or any of its subsidiary undertakings or any other invitation or inducement to engage in investment activities, nor shall this presentation (or any part of it) nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 2
  3. 3. Highlights Acquired 58.5% of Cairn India Ltd. for a total consideration of $8.67bn − Acquisition completed on 8 December 2011 − 38.5% stake held by Vedanta plc and 20% stake held by Sesa Goa − Acquisition funded c. 50% from own resources and balance c. 50% from acquisition debt Cairn India – largest private crude producer in India (>20% of India’s production) − World class assets at Rajasthan (>6.5 bn boe in place, with substantial upside) − Low cost operations at Rajasthan and potential to produce 240,000 bopd − Recent exploration success in Sri Lanka − Strong, experienced management team − Enhances and diversifies Vedanta’s strong growth pipeline “Two major investment decisions made by major companies BP and Vedanta ... have reestablished faith in the hydrocarbon potential in India” − Notes: Mr Jaipal Reddy, Minister of Petroleum and Natural Gas on 5 Dec 2011 at World Petroleum Congress All % shareholding in Cairn India is on a fully diluted basis Transaction immediately earnings accretive ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 3
  4. 4. EBITDA Growth and Diversification H1 FY2011 Power 2% Iron Ore 32% Proforma H1 FY2012 with Cairn India H1 FY2012 Aluminium 11% Power 3% Oil & Gas¹ 35% Aluminium 5% Iron Ore 18% Power 2% Aluminium 3% Copper 15% Copper 24% Copper 21% Zinc-Int. 12% Zinc-India 34% EBITDA: $1.3bn Notes: 1. Zinc-India 38% EBITDA: $1.7bn Zinc-India 25% Iron Ore 12% Zinc-Int. 8% EBITDA: $2.6bn EBITDA from Cairn India before exceptional items and foreign exchange gains ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 4
  5. 5. Cairn Acquisition Funding Consideration ($bn) 20% stake acquired by Sesa Goa 2.88 38.5% stake acquired by Vedanta plc 5.79 Total Consideration 8.67 Funding Sesa Goa – Own resources 2.88 Sr. Secured Bank Term Loan - Tranche A (18 months) 1.47 Sr. Secured Bank Term Loan - Tranche B (36 months) 1.31 Bonds (Maturing 2016 and 2021) 1.65 Own Cash 1.36 Bridge to Equity – never drawn, cancelled - Vedanta plc – Total 5.79 Total Funding 8.67 c. 50% Funding from own resources and balance c. 50% from acquisition debt ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 5
  6. 6. Credit Metrics Proforma 30 Sep 2011 (including Cairn) in $ mn Debt Cash and Liquid Investments Vedanta plc 9,127 178 8,949 16,620 6,438 10,182 Vedanta Consolidated Credit Metrics Net Debt/EBITDA EBITDA/Gross Interest Expense1 Net Assets/Debt Gearing2 Notes: Net Debt FY2011 LTM H1 FY2012 Proforma LTM H1 FY2012 (incl. Cairn) 0.55 x 1.82 x 1.64 x < 2.75 x 5.0 x 4.3 x 5.29 x > 4.0 x 2.61 x 2.05 x 2.43 x > 1.75 x 13% 37% 36% Covenant 1. Interest includes Capitalized Interest 2. Gearing is calculated as Net Debt divided by the sum of Net Debt and Equity ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 6
  7. 7. Cairn India – A World Class Asset Base Production Blocks 10 blocks in the Portfolio Exploration Potential Rajasthan (RJ-ONRajasthan (RJ-ON-90/1) Cairn (Operator) 70% ONGC RJ-ON-90/1 WI 70% 30% East Coast KG-DWN-98/2 KG-ONN-2003/1 (CB/OSCambay (CB/OS-2) Cairn (Operator) 40% ONGC 50% Tata Petrodyne 10% WI 10% WI 49% PKGM-1 (Ravva) KG-OSN2009/3* PR-OSN-2004/1* WI 22.5% WI 100% WI 35% West Coast CB/OS-2 (PKGMRavva (PKGM-1) Cairn (Operator) 22.5% ONGC 40% Videocon 25% Ravva Oil 12.5% WI 40% KK-DWN-2004/1 MB-DWN2009/1* WI 40% WI 100% Sri Lanka SL 2007-01-001 WI 100% * Under Force Majure Q2 FY 2011-12: Average Daily Gross operated production at 169,944 boe; Cairn (Working Interest) at 99,220 boe ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 7
  8. 8. Financial Highlights Price Realization (USD/boe) Gross Production (Kbopd) 100 Q2 FY12 0 50 691 174 68 Q2 FY11 808 161 74 Q3 FY11 830 172 92 Q4 FY11 578 170 104 Q1 FY12 Revenue 577 165 100 150 200 0 200 400 600 800 USD Million Cash Flow from Operations PAT Q2… 461 Q1 FY12 428 610 Q4 FY11 576 543 Q3 FY11 577 448 Q2 FY11 455 341 0 200 400 USD Million 337 600 800 0 200 400 USD Million *PAT and CFFO are without adjusting one time exceptional item of past Rajasthan royalty costs Net Cash as on 30 September 2011 was USD 1,458 million ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 600 800
  9. 9. Rajasthan Update Mangala production ~125,000 bopd; reservoir performance as per expectations MPT Produced and sold >60 mmbbls of crude to Indian refiners; gross cumulative field revenue in excess of USD 5 billion to date Bhagyam ready to commence production, subject to GoI approval Pipeline Expect to exit FY 2011-12 at 175,000bopd with the support of JV and GoI Development of Aishwariya underway; plan to commence production in H2 CY 2012, subject to JV and GoI approval Total Pipe Diameter 790 mm (32”) High Density Polyethylene Wrap Significant part of currently envisaged basin potential of 240,000 bopd to be met from MBA fields Augmentation of processing capacity and pipeline infrastructure to deliver currently envisaged basin potential in CY 2013 Notes: Heat Tube Poly Urethane Foam Insulation Data as per 20 Oct 2011 press release of Cairn India Ltd ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 9
  10. 10. Rajasthan Royalty Payable at 20% of the post well-head value of the crude oil produced (on an ex-royalty basis); translates to ~15% of the sale value Post the acceptance of pre conditions royalty becomes part of the contract cost for the cost recovery purpose and the calculation of profit petroleum The cost recoverability is effective on a retrospective basis since the production startup Cairn India has taken the impact of total past royalty in its Q2 FY 2011-12 financial results PAT (USD million) EPS (INR/share) Including net Q2 FY 2011-12 Rajasthan royalty estimate adjustment 461 11.13 Net Rajasthan royalty one-time estimate up to Q1 FY2011-12 (net of Profit Petroleum) 294 Reported 167 Q2 FY 2011-12 ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 4.01 10
  11. 11. Rajasthan - Future Resource And Value Potential ~6.5 Billion boe Gross Initial In Place Volumes ~2.5 Billion boe in 35+ prospects ~4 Billion boe 20 additional discovered fields including Barmer Hill Most Likely Prospectiv e 250 Gross Reserves, Resources1 and Potential2 140 Risked Prospective Resource In Place Gas GIIP Oil STOIIP 308 1 The independent estimates of Contingent In Place 707 MBA EOR R & S 12 2.1 Billion boe R & S STOIIP 293 MBA Fields, Raageshwari and Saraswati FDP approved 468 B 151 MBA STOIIP B A R&S Contingent Resource mmbbls Notes: risked resource 178 mmbbls M 477 1,293 M Reserves and Contingent Resources recently carried out by D&M are in line with the CIL estimates 2 Top 35 prospects audited by D&M A 66 78 BH + Others 2P+2C MBA EOR Barmer Hill +Other Fields Risked Prospects, Leads & Concepts mmbbls Data as per 23 Mar 2010 press release of Cairn India Ltd ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 11
  12. 12. Exploration Programme Play based approach to building portfolio Diversity of basin, plays and environments Ongoing regional petroleum system studies “Drill Bit exploration”: >190 exploratory /appraisal wells Major long term player Large proprietary database Experienced team Successful exploration over 10 years: Success ratio ~50% RJ-ON-90/1 KG-ONN-2003/1 Assessing new plays, generate new prospects MB-DWN-2009/1 Nagayalanka-1Z discovery; Phase II Exploration & Appraisal well drilling in progress I N D I A Under Force Majeure RAVVA Infill drilling completed KK-DWN-2004/1 Acquired 300 km2 3D; data processing in progress KG-DWN-98/2 3 appraisal wells drilled OPERATED NON-OPERATED SL-2007-01-001 3 exploration well program: 1st & 2nd wells encountered hydrocarbons, rd well drilling in progress 3 KG-OSN-2009/3 Under Force Majeure PR-OSN-2004/1 SRI LANKA ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) Under Force Majeure 12
  13. 13. Exploration - Sri Lanka Block (SL 2007-01-001) Cairn Lanka 100% Working Interest (NOC back-in 15%) − Cairn India’s first overseas venture India − Block Area: ~3,000 km2 − Water depth: 400 -1,900m Under explored, frontier basin with multiple plays Exploration Program SL-2007-01-001 SL-2007-01- − 3 well drilling campaign commenced in August 2011 − Successive discoveries in the two exploration wells drilled − Establishment of working hydrocarbon system in the basin SRI LANKA − 3rd exploration well drilling in progress 50km ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 13
  14. 14. Summary Immediately earnings accretive World class asset and management team Common operating philosophy – focus on delivery and costs Maintain strong credit metrics – funded through c.50% own resources and c.50% debt Unique opportunity to create value - enhances and diversifies Vedanta’s strong growth profile ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 14
  15. 15. Appendix
  16. 16. The Transaction Description Date Sesa Goa Vedanta plc Total Purchase from Petronas 19-Apr 10.4% - 10.4% Open Offer 30-Apr 8.1% - 8.1% Purchase from Cairn Energy 12-Jul - 10.0% 10.0% Purchase from Cairn Energy 7-Dec 1.5% 28.5% 30.0% 20.0% 38.5% 58.5% Total Accounting Treatment Associate Accounting for Vedanta: 11-Jul to 7-Dec Accounting from 8-Dec: − Consolidation by Vedanta − Associate Accounting by Sesa Goa Notes: All % shareholding in Cairn India is on a fully diluted basis ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 16
  17. 17. Debt Maturity Profile $5.9bn of cash and liquid investments as of 30 Sep Debt Maturity Profile2 (in $bn) Debt at Vedanta Plc FY2012 maturities largely tied up Debt at Subsidiaries Proforma Addn Debt at VED plc for Cairn Acquisition Credit ratings of BB/Ba2/BB1 5.9 1.3 2.4 2.8 2.3 2.6 4.6 1.5 1.5 1.3 2.4 0.4 1.0 FY 2012 Notes: 0.5 FY 2013 FY 2014 0.9 0.1 FY 2015 0.1 0.2 0.3 FY 2016 FY 2017 and later³ 1. Issue credit Ratings as per S&P, Moody’s and Fitch respectively 2. Maturity Profile as of September 30, 2011 3. Convertibles at Vedanta plc of $1,250 million due in FY2017 (with a put option in FY2015) is included at book value of $988mn Convertibles of $883 million due in FY2017 (with a put option in FY2013) is included at book value of $666mn ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 17
  18. 18. Vedanta Group Structure Vedanta Resources (Listed on LSE) 79.4% Konkola Copper Mines (KCM) 51.0% Bharat Aluminium (BALCO) 70.5% Vedanta Aluminium (VAL) 54.6% 29.5% 94.8% 3.6% Sterlite Industries (Listed on BSE, NSE and NYSE) 64.9% 100% Zinc-India(HZL) (Listed on BSE and NSE) 74% Skorpion and Lisheen Black Mountain 55.1% Madras Aluminium (MALCO) Sesa Goa (Listed on BSE and NSE) 100% 100% Sterlite Energy Australian Copper Mines 38.5%1 20%1 Cairn India Ltd (Listed on BSE and NSE) 51% Liberia Iron Ore Assets Zinc-International KEY Aluminium Copper Iron ore Power Zinc-India Notes: 1 On a fully diluted basis Structure as at 30 September 2011 updated for Completion of Acquisition of a Controlling Stake in Cairn India Ltd. ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011) 18

×