The Vedanta Group hopes to raise $1 billion by the end of December to honour a bond repayment that’s due in January, Chief Financial Officer (CFO) Ajay Goel said on November 4 during a post-earnings call with analysts, adding that the company is engaging with many bankers.
"We need almost a billion at Vedanta Resources Ltd in the next six months, for which we have multiple options, we are engaging with many bankers," Goel said, adding that the company will have the required amount "hopefully by December end."
The mining conglomerate, which is reeling under a debt mountain, managed to reduce its net debt by Rs 1,420 crore sequentially to Rs 57,771 crore as of the end of the September quarter.
According to data from Bloomberg, the conglomerate has bond repayments of $3.2 billion coming up over the next two years. About $2 billion worth of bonds are slated for redemption in 2024 — half of which are due as early as January — and another $1.2 billion in 2025, the data suggests.
"For both Vedanta Resources and Vedanta Limited, we feel comfortable about upcoming maturities in the current fiscal," added Goel. Commenting on bonds maturing in the second half, Goel flagged a cash flow plan of more than $1.2 billion and said the company is engaging with the capital markets be it public sector bankers, multinational bankers, etc.
"Both in terms of refinancing and repayment, we have multiple options," Goel explained. Meanwhile, Bloomberg reported on November 4 that the group is in advanced talks to raise a $1.25 billion private loan with an interest rate between 18 and 20 percent.
The company is nearing a deal after weeks of negotiations with lenders, including Cerberus Capital Management LP, Davidson Kempner Capital Management LP, Varde Partners Inc and Ares SSG Capital Management Ltd, the report added, citing people familiar with the matter.
Vedanta did not immediately respond when asked about the discussions with the lenders mentioned in the Bloomberg report.
The group reported a net loss of Rs 915 crore for the July-September quarter on November 4. The net loss was due to exceptional expenses owing to a change in tax rates as the company shifted to a new tax regime.
Cost of finance in the quarter jumped 54 percent year-on-year (YoY), mainly due to increase in average borrowings and blended cost of borrowings, the company said in the press release.
Asked if there would be a further increase in funding costs, Goel said, "Not really. The cost of the funding is more a reflection of the current macro environment and is not necessarily about Vedanta or Vedanta Resources. Our recent refinancings are in the same ballpark, not very high."
Vedanta has faced challenges in financing its projects and is considering different options, including unlocking value in its businesses. In fact, the parent Vedanta Resources raised around $450 million from two of its rivals earlier this year, triggering concerns that the company cannot raise money from regular debt channels and banks.
The measures come as the conglomerate mulls restructuring of its business. In September, the company's board approved a plan to split the business into six separately listed companies.
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