London-headquartered Anil Agarwal-promoted Vedanta Resources today sold USD 1 billion of 7-year bonds at 6.125 percent and said the proceeds will be used to refinance USD 1.8 billion of its higher priced existing debt.
"Vedanta today priced its RegS bonds (dollar debt sold to non-American investors) at 6.125 percent. We intend to use the net proceeds from this offering primarily to fund its offers to purchase for cash some its outstanding 2019 USD 7,747,72,000 bonds priced at 6 percent and another 2021 USD 9,00,000,000 bonds priced at 8.25 percent and also to repay other existing debt," Vedanta said in a statement.
Of this, it has already received and accepted for purchase USD5,22,513,000 of the 2019 bonds and USD2,29,843,000 of the 2021 bonds.
"This comprehensive refinancing plan announced earlier is leverage-neutral and is funded through a mix of bonds and term-loans. It has received commitments from global and Indian banks for USD840 million of term loans with a final maturity of five years," the company said.
On the completion of the bond sale, Vedanta will proactively refinance part of its 2019 and 2021 bond maturities and is expected to have no significant bank loan repayments due over the next 18 months. These transactions will extend its average debt maturity by 1.5 years and lower its average cost of borrowing, it said.
On the current sale, it received strong investor interest and is favourably priced in comparison to its previous bond offering in January 2017 at 6.375 percent for a 5.5-year maturity.
The bonds, which will be traded on the Singapore Stock Exchange, have been rated B3 by Moody's and B+ by S&P.
"The transaction is in line with our stated financial strategy to strengthen our balance sheet. We've taken a number of proactive measures last year to extend maturities, optimise our funding structure and as a result have created value for all stakeholders," company chairman Anil Agarwal said on the completion of the bond sale.
Barclays, Credit Suisse, DBS Bank, First Abu Dhabi Bank, JP Morgan and Standard Chartered acted as joint global coordinators, while Axis Bank, Barclays, Credit Suisse, DBS Bank. First Abu Dhabi Bank, ICICI Bank, JP Morgan and Standard Chartered as joint lead managers and joint book runners.
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