Billionaire Anil Agarwal-led Vedanta Resources will sign a $1.2 billion loan agreement with a clutch of global private credit funds next week as it looks to partly repay $3.2 billion of bonds maturing in 2024 and 2025, said people aware of the matter.
The funding round is led by New York-based Cerberus Capital Management, which will underwrite about $300 million, followed by others including Ares SSG Capital Management, Davidson Kempner Capital Management and Varde Partners, the people said.
The transaction is crucial for the group to avoid a potential default. The loan will be raised against shares of Vedanta Resources and royalty receivables from group entities and will be priced upwards of 18 percent per annum. The tenor of the loan will be two years.
The mining and metals conglomerate has $1 billion of 13.875 percent bonds coming up for repayment in January, another $1 billion of 6.125 percent paper due in August 2024, and $1.2 billion of 8.95 percent bonds maturing in March 2025.
A spokesperson for Davidson Kempner declined comment and email queries sent to Cerberus Capital, Ares SSG and Varde Partners were unanswered.
"Negotiations are at a final stage and an agreement is expected to be signed by next week," one person said. "Disbursement is expected to be done by January."
The Vedanta Group hopes to raise $1 billion by the end of December to honour the bond repayment that’s due in January.
Execution risks
In November, Vedanta’s chief financial officer Ajay Goel said the group would need almost a billion dollars in the next six months, for which it was engaging with lenders. Goel said the group was looking to close the funding before the end of December to meet bond repayments due in January.
In August, S&P Global Ratings revised the credit outlook for Vedanta Resources to negative, citing increased funding risks. The agency affirmed the ‘B-’ rating for the company, indicating relatively higher credit risk.
S&P said Vedanta’s weakened access to cash flow from its subsidiaries at a time of challenging external financing conditions has raised its refinancing risk.
"The company has about $3 billion of debt due between now and August 2024,” it said.
Vedanta Resources is making refinancing progress, but execution risks remain, S&P said.
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