Goa Shareholder Seeks to Stop Cairn Purchase
Aug. 25 (Bloomberg) -- A shareholder of Vedanta Resources Plc's Indian unit has filed a petition in the Supreme Court to prevent the company from buying a 20 percent stake in Cairn India Ltd.
Harinarayan Bajaj, who owns shares in Sesa Goa Ltd., said in the petition that India's biggest iron ore exporter shouldn't be allowed to proceed with the Cairn India purchase until a previous lawsuit challenging Vedanta Resources' acquisition of Sesa Goa is settled, Mahesh Agarwal, Bajaj's lawyer, said in New Delhi today. Bajaj had also filed the earlier suit in 2007.
The legal challenge is the third setback in two days to Vedanta's plan to expand its natural resources businesses in India. Yesterday, India's Environment Ministry rejected the London-based company's plan to mine bauxite in Orissa state. Vedanta's proposal to buy as much as 60 percent of Cairn India for $9.6 billion may face a counter bid from state-owned Oil & Natural Gas Corp., a person familiar with the matter said yesterday. GAIL India Ltd., the nation's monopoly gas distributor, may join ONGC, another person said.
Pavan Kaushik, spokesman for the Vedanta group, including Sesa Goa, did not immediately answer calls to his mobile phone seeking comment.
Vedanta, controlled by billionaire Anil Agarwal, bought Mitsui & Co.'s 51 percent stake in Sesa Goa for $981 million in 2007. The purchase triggered an open offer for a further 20 percent stake in Sesa Goa, which prompted Bajaj to file his suit.
Vedanta said Aug. 16 it's buying as much as 60 percent of Cairn India to gain access to India's biggest onshore oil field. It will own as much as 40 percent of Cairn India, while Sesa Goa will own 20 percent.
Bajaj is also against the Cairn India stake purchase as it will drain Sesa Goa's cash reserves, his lawyer said.
Sesa Goa plans to fund most of the $3 billion Cairn India stake purchase from cash reserves that are expected to reach 120 billion rupees ($2.6 billion) by the end of March, Managing Director Prasun Kumar Mukherjee said last week.
Mukherjee had said the open offer for Cairn India's stake will not hamper the company's expansion plans. Sesa Goa is planning to double iron ore output to 50 million metric tons in two to three years.