Vedanta pledges 5.77% in Hindustan Zinc in exchange for Rs8,000 crore term loan

9 Jun 2022 , 11:31 AM

This development comes days after the Cabinet Committee on Economic Affairs (CCEA) approved the government's sale of a 29.5% stake in Hindustan Zinc Ltd (HZL), a Vedanta group company.

In a filing to BSE, the company said "...to secure the Rs8,000 crore term loan facility...VEDL (Vedanta Ltd) has created encumbrance in the form of Pledge (5.77% of the paid-up share capital of HZL) and NDU (non-disposal undertaking) (50.10% of the paid-up share capital of HZL) in respect of its shareholding in HZL".

Vedanta had previously encumbered 64.92% of HZL's paid-up share capital to secure a syndicated term loan facility of Rs10,000 crore in the form of a pledge – 14.82% of HZL's paid-up share capital – and a non-disposal undertaking – 50.10% stake – had been released, according to the company.

"...none of VEDL's (Vedanta Ltd) participation in HZL is encumbered for any personal borrowing of any of HZL's promoter/promoter group, and this is a promise by VEDL to maintain their present shareholding in HZL, for the comfort of VEDL's lenders," the statement continued. Up to the year 2002, Hindustan Zinc was a government-owned enterprise.

The government sold a 26% stake in HZL to Sterlite Opportunities & Ventures Ltd for Rs445 crore in April 2002, giving Vedanta group management control of the company. Until 2002, Hindustan Zinc was a government-owned enterprise.

In November 2003, Vedanta purchased 20% from the market and another 18.92% from the government, bringing its total stake in HZL to 64.92%.