Vedanta wins bank backing for £3.75bn Cairn India deal

MINING giant Vedanta Resources yesterday said it had agreed a £3.75 billion financing deal with a consortium of lenders - including Royal Bank of Scotland - to help fund its proposed acquisition of a majority stake in Cairn Energy's Indian business.

Other banks involved include Barclays Capital, Citi, Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley and Standard Chartered.

Cairn, founded by Sir Bill Gammell, announced in August that it had struck a deal with Vedanta, which already owns mining interests across India, to buy a 51 per cent stake in Cairn India for 5.4bn.

The agreement needs the consent of the Indian government but approval is expected early in the new year. Shareholders in Cairn are expected to receive a large return of cash from the deal.

Cairn India has grown to be the country's fourth largest oil & gas producer with current production running at 125,000 barrels of oil per day, or 17 per cent of India's oil production.

Earlier this month Cairn also announced its final withdrawal from Bangladesh - the country where discoveries in the 1990s helped its transformation into one of the UK's biggest companies - as the group focuses on its drilling programme in Greenland.

Anil Agarwal, chairman of Vedanta Resources, said yesterday's funding agreement was " a testament to the strength of the Vedanta story".

It came just days after the company said it intended to list Zambian-based metals group Konkola Resources on the London stock market in a float that could be worth 3.7bn.

Vedanta, which will remain a majority shareholder in the newly listed company, is also said to being considering floating its Sterlite Energy division, which operates power plants across India.

Shares in Vedanta closed down 11p at 2,208p yesterday.