Vedanta Resources raising $350 mn from UAE and other lenders to refinance group debt

Vedanta Resources

Vedanta Resources Limited, the UK-based parent of Vedanta Ltd, is in talks with foreign banks to raise $350 million for part repayment of certain group-level borrowings and for interest payments, recent disclosures made by Vedanta Limited shows.

The borrowing has been undertaken by Vedanta Resources Limited, with its subsidiaries Twin Star Holdings, Welter Trading, Vedanta Holdings Mauritius, Vedanta Holdings Mauritius II, and Vedanta Netherlands Investments acting as guarantors.

As per the disclosures, the Vedanta holdco has already tied up funding of $110 million from First Abu Dhabi Bank and Mashreqbank. The agreement allows additional lenders to join subsequently for the remaining $240 million, the company said.

Disclosures show that for raising these funds a negative lien has been created on Vedanta Ltd shares held by the promoter entities, preventing them from selling, pledging, or creating any further encumbrance on the shares without lender consent. The agreement also requires Vedanta Resources and its subsidiaries to retain control of Vedanta Limited and maintain a minimum ownership of 50.1 percent of its issued equity capital.

Vedanta Resources and other promoter entities hold a 56.38 percent stake in Vedanta, of which 99.99 shares were already under some form of pledge or encumbrance.

The proceeds of the borrowing will be used to refinance existing group-level debt, service interest, and meet general corporate requirements of the Vedanta group, according to the filing.

An email seeking comment from Vedanta group did not elicit a response till the time of publication.

Improving credit outlook

Vedanta Resources’ latest borrowing comes at a time when its credit profile is showing signs of improvement, with S&P Global Ratings maintaining a positive outlook on the group. In a December note, S&P said that cost-reduction initiatives, favourable commodity prices and deeper backward integration were expected to support earnings and cash flows over the next two years.

The rating agency expects Vedanta Resources’ EBITDA to grow 10 percent annually in FY26 and FY27, driven by higher captive alumina production, rising aluminium output and an increasing share of value-added products in aluminium and zinc. The commissioning of a 1.5 million tonne alumina refinery at Lanjigarh is expected to lower aluminium costs by about $50 per tonne as capacity ramps up.

Stronger earnings are likely to lift Vedanta Resources’ funds-from-operations-to-debt ratio to around 30 percent over the next 12–18 months, from an estimated 24 percent in FY26. S&P also noted that refinancing of high-cost private credit and steady deleveraging could reduce holding-company debt by about $500 million annually from FY27, though the group remains reliant on dividends from Vedanta Limited to service debt.