Vedanta Resources looking to raise $500-$600 million loan

According to news reports, Vedanta Resources Ltd. (VRL) is in talks with Deutsche Bank and other international lenders, such as JPMorgan and Barclays, to borrow $500-600 million in financing to service debt obligations that will come up for maturity later this month.

The London-based VRL intends to borrow the funds through its Zinc International division.

Following setbacks in obtaining funding from Farallon Capital Management, VRL has picked up the conversation with banks to look into further financing possibilities.

A 7.125% bond that matures on May 31 is owed $500 million.

For a loan of $1.25 to 1.5 billion to Zinc International, VRL has been actively involved in discussions with Farallon since the middle of February. Delays have occurred since securing a guarantee from VRL’s India-listed subsidiary Vedanta Ltd. was a need for the loan to close.

News reports claim that the banks wanted to charge a Secured Overnight Financing Rate (SOFR) plus 800 basis points. The SOFR is 5.06% at the moment.

VRL had been in talks with international banks to raise $1 billion at first, but the company had to modify its goals because of the high-interest rate. Additionally, Vedanta Ltd. has requested approval from the Reserve Bank of India for a larger loan for which banks have stressed the necessity for a guarantee from the company.

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