Vedanta Resources, headquartered in London, is reportedly on the brink of finalizing a private loan totaling $1.25 billion from various international investors, as outlined in a recent report by The Financial Express (FE). This strategic move comes ahead of the company’s $1 billion debt maturity in January 2024, and the debt, expected to be confirmed in the upcoming week, is poised to carry higher interest rates compared to its existing counterparts.
In the midst of ongoing negotiations, Vedanta is in talks with New York-based Cerberus Capital Management for a $300 million loan, while Davidson Kempner Capital Management and Varde Partners are being approached for $200 million each. Ares SSG, an alternative investment firm, is also engaged in discussions for a sum ranging from $100 to $150 million. Further dialogues involve Edelweiss Alternative, BlackRock, and other potential investors. According to sources close to the matter, the loans, carrying an 18 percent interest rate over three years, are slated for disbursement in January.
The FE report highlights that Vedanta’s decision to secure funds at a higher interest rate, typically ranging from 10-12 percent for foreign debt, underscores the urgency to meet impending debt obligations. The funding, collateralized against Vedanta Resources Limited’s (VRL) shares, is deemed crucial to avert potential default, particularly in light of the imminent $1 billion debt maturity in January 2024 and an additional $1 billion due in August 2024. Additionally, the company faces debt obligations amounting to $3.1 billion in FY25.
On a related note, Hindustan Zinc, a company owned by Vedanta Ltd, announced on Wednesday its intention to provide an interim dividend of Rs 6 per equity share for the fiscal year 2022-23, as reported earlier by Business Standard. This dividend, totaling Rs 2,535.19 crore, will contribute Rs 1,645 crore to Vedanta in exchange for its 64.92 percent stake in Hindustan Zinc.
In a statement made last month, CEO Arun Mishra expressed optimism about the company’s performance in the coming quarters. He noted that Vedanta is well-positioned to capitalize on strong demand and emerging growth opportunities, driven by the Indian growth story.
