NCLAT Grants Relief To Vedanta On NCLT Order In Unit’s Demerger Plan
The appellate tribunal stays the NCLT order and asks Talwandi Sabo Power to provide bank guarantee of $146 million; will hear the matter on 4 August
(The Corner Office Journal) -- India’s National Company Law Appellate Tribunal (NCLAT) granted an interim relief to Vedanta Ltd. on the National Company Law Tribunal’s (NCLT) order in the proposed demerger of its unit Talwandi Sabo Power Ltd. (TSPL).
The appellate tribunal on 27 May stayed the NCLT's March order that rejected the demerger of Vedanta’s power business and its merger with the resulting company TSPL, according to the NCLAT order.
The NCLAT also asked TSPL to provide a bank guarantee of 1,245 crore rupees ($146 million) to protect the interest of Sepco Electric Power Construction Corporation within two weeks.
The NCLT had rejected the proposed demerger, citing insufficient debt disclosure, after China’s Sepco opposed the deal over its debt of 1,245 crore rupees.
“The issues raised before us need to be considered at length and presently in view of the submissions made, the scheme is severable and thus in case the stay is not granted to the impugned order, it may affect the second motion application filed in respect of other three transferor companies pending in different tribunals,” the NCLAT said in its order.
The NCLAT will hear the matter in detail on 4 August.
Following the interim stay on the NCLT’s order, Vedanta said it remains committed to its strategic reorganization plan and continues to work toward unlocking long-term value for all stakeholders.
The diversified natural resources conglomerate plans to demerge four of its businesses into respective subsidiary companies, namely Vedanta Aluminium Metal Ltd., TSPL, Malco Energy Ltd. and Vedanta Iron and Steel Ltd.
Note: $1 = 85.4431 Indian rupees
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