Vedanta Resources PLC, the holding company of Vedanta Limited, has begun discussions with lenders to raise up $1 billion through foreign currency bonds, sources aware of the development told Moneycontrol requesting anonymity.
According to the sources cited above, billionaire Anil Agarwal led metals and mining conglomerate plans to refinance up to $600 million of bonds maturing in 2026 and also raise fresh funds towards equity infusion in some of the group’s existing and new businesses.
Vedanta Resources has raised over $2 billion in recent months through stake sales in India-listed Vedanta Limited. However, it has shelved plans to sell its steel business for which it was in talks with potential buyers.
“The group liquidity position has improved considerably after the stake sales and lenders should not have much problem in extending new loans to it," said a person aware of the matter.
“Vedanta Resources has nothing more to add than what has already been shared on the SGX [Singapore Exchange Ltd;] till the transaction is concluded,” a spokesperson for Vedanta said in a response to a query from Moneycontrol.
Stake sales and debt reduction
In July, Vedanta Limited raised Rs 8,500 crore through a qualified institutional placement (QIP) offering of which the company planned to use Rs 6,375 crore to repay in part or full the debt it owes to Oaktree Capital, Deutsche Bank and Union Bank of India (UBI). As of June 25, the company owed Rs 17,470 crore to Oaktree, Deutsche Bank and UBI.
Also Read: How Vedanta plans to use its QIP proceeds
Earlier in June, a Vedanta group entity, Finsider International Company Limited, sold almost 98 million shares to raise Rs 4,184 crore to pare its debt. In February, the same promoter entity had sold around 65 million shares in a block deal to raise Rs 1,737 crore. Also in August, Vedanta Limited raised sold Hindustan Zinc Limited shares worth around Rs 6,500 crore through an offer for sale.
In its latest annual report, Vedanta said that its UK-based promoter Vedanta Resources, will look to reduce its debt by $3 billion over the next three years. The debt on Vedanta Resources' books stood at $6 billion as of financial year 2024 (FY24).
Rating upgrade
On July 25, global rating agency S&P upgraded Vedanta Resources credit rating to B- from CCC+ on the back of improving capital structure and liquidity.
“We believe Vedanta Resources Ltd. has sufficient internal resources to meet debt maturities until December 2025 following recent funds raised and improved dividend capacity at its subsidiaries,” the rating agency noted in a report. It added that debt reduction at Vedanta Resources is gradually making the company's capital structure more sustainable.
“We estimate debt at the Vedanta Resources level could decline by another $1 billion to about $4.5 billion over the next 12 months. This is based on our estimates of potential dividends and brand fee from Vedanta Ltd. over this period. Accordingly, we estimate interest expenses at the Vedanta Resources level will drop to $550–$600 million by the end of fiscal 2025 (ending March 31, 2025),” S&P said.
However, the rating agency cautioned that the refinancing of $1.2 billion of debt due in April 2026 is the key factor from a credit perspective. This includes $600 million each from a private credit facility and a bond issue.
“The refinancing of the April 2026 bond issue has to be done by December 2025. If that fails, the maturity of the company's January 2027 and December 2028 bonds, aggregating about $2.4 billion, would accelerate to April 20, 2026. This could precipitate a liquidity stress,” the rating agency noted.
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