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| Photo Credit: The Hindu
The Centre has reiterated its opposition to the Hindustan Zinc Ltd. board’s move to purchase its parent Vedanta group’s overseas zinc assets for almost $3 billion, and warned the erstwhile state-owned company it will explore all legal avenues against the proposed transaction.
In a missive to the HZL company secretary on February 17, the Ministry of Mines has said the government’s dissent was already recorded by its three representatives at its January 19 board meeting, following which the management announced the board’s green signal for the buyout proposal. The government has a residual stake of 29.54% in HZL and has plans to divest this stake over time.
“In the context of the proposed resolutions which envisage the acquisition of THL Zinc (a Vedanta company) by HZL (also a Vedanta company) thus being a related party transaction, we, the Government of India would like to reiterate our dissent on the matter and the resolutions forming part of the agenda matter,” wrote Sanjeev Verma, a director in the ministry. “We would urge the company to explore other cashless methods of acquisition of these assets,” he added.
“We would like to bring to your attention that the Government of India will oppose any proposed resolutions in furtherance of such agenda matter and will explore all legal avenues available… the Company is requested to not take any further action,” Mr. Verma cautioned.
HZL, in its response to the ministry on Monday, said that the proposed transaction could only be done “post approval of the shareholders in the general meeting” as per SEBI and Companies Act norms.
“Further, the notice calling the shareholders meeting has not been issued so far,” HZL’s company secretary wrote back. “The above referred matter shall be placed before the Board of Directors in the ensuing Board meeting for its consideration,” the official added.