Latest on Vedanta Cairn India Deal

Vedanta Won't Sell Stock to Repay Cairn Debt, Agarwal Says

Aug. 17 (Bloomberg) -- Vedanta Resources Plc, the mining company that agreed to buy control of oil explorer Cairn India Ltd., said it won't sell shares to repay the $6.5 billion of debt used to finance the deal.

Vedanta is borrowing the money for at least two years to take a stake of as much as 40 percent in Cairn India. Sesa Goa Ltd., an iron ore producer in which Vedanta has a majority stake, will pay cash for 20 percent of Cairn India. Vedanta's earnings before interest, tax, depreciation and amortization will be more than $5.5 billion this year, helping it to repay the debt, Chairman Anil Agarwal said.

"We are in a very comfortable position," Agarwal, who founded the company and is the controlling investor, said yesterday in a Bloomberg Television interview at his home in London. "If necessary we can roll over and get a refinancing."

Vedanta, which mines copper and zinc and smelts aluminium, agreed to pay as much as $9.6 billion for as much as 60 percent of Cairn India to diversify into oil with the Mangala field in Rajasthan. London-based Vedanta also plans further expansion in oil and gas using Cairn India's exploration expertise.

"I will allocate funds for them whatever their plans are, whether they go to India's various places or go to Sri Lanka or go to Africa," Agarwal said.

Vedanta said in May Ebitda for its fiscal year ended March 31 rose 42 percent to $2.3 billion.

Orissa Permit

Credit-default swaps linked to Vedanta debt climbed 116 basis points to 649 yesterday, according to data provider CMA, the highest since May. Swaps are used to speculate on a company's ability to repay debt and rise when perceptions of credit quality deteriorate.

Vedanta climbed 100 pence, or 4.9 percent, to close at 2,153 pence on the London Stock Exchange after tumbling 20 percent last week, when the acquisition was reported.

Vedanta plans to mine bauxite, a raw material used to make aluminum, in the Indian state of Orissa. A panel set up by the environment ministry said yesterday a permit to allow operations at the site should be rejected because the mine will endanger the livelihoods of local people. The ministry will consider the panel's report and issue its decision on Aug. 20.

Agarwal said he expects to get permission to mine.

"It's nice that the debate is there, but I think at the end it will be all right," he said. "We will not move an inch of grass unless we have a full clearance."