Sterlite raises $500 million in convertible notes for copper project expansion

Sterlite Industries Ltd, a unit of UK-based Vedanta Resources Plc, has raised another $500 million in convertible notes in the American market, which the company said, would be used to fund the expansion of its copper project in South India.

Sterlite, a unit of Vedanta Resources Plc, yesterday said it plans a 400,000 tonne capacity expansion, together with the setting up of a 160 megawatt power plant, at its copper smelter at Tuticorin, in Tamil Nadu.

The expansion is expected to cost about Rs2,300 crore ($497 million). The amount raise is over and above the $1.5 billion the company raised from the American market in July.

Sterlie said it would convert the notes at $23.33 apiece into American depositary shares in 2014, Mumbai-based Sterlite said today in a statement. The notes will mature 30 October 2014.

The expansion plan and the raising of additional funds comes as a surprise announcement as Sterlite had earlier said that the company doesn't need to raise another $500 million as it had cash of about $3.5 billion it its kitty.

Sterlite is also locked in a bidding war with Grupo Mexico for the acquisition of the mining assets of bankrupt US miner Asarco. A decision on the sale will be announced on 19 October and the case is being heard in the US district court in Brownsville, Texas.

The Sterlite stock hit a five-week low of Rs790 and was trading at Rs820 a share at noon. Yesterday, its American depositary receipts hit a low of 1.9 per cent at $16.62.