A Vedanta subsidiary is raising expensive loans in a convoluted agreement to assist the India-listed mining company in paying down its debt.
A wholly owned subsidiary of Vedanta, Vedanta Semiconductors, raised ₹1,804 Crore in debt from private lenders, including Davidson Kempner and Varde Partners. According to news reports, Vedanta Ltd. will utilize the earnings to repay its debt through loans.
According to reports, the subsidiary will give Vedanta Ltd. two-year unsecured inter-corporate loans (ICLs), with the conditions of the loan to be determined by recommendations from an outside consultant.
According to news reports, Vedanta would utilize the ICL to settle its impending financial commitments and in part to pay brand fees to its London-based holding company, Vedanta Resources Ltd (VRL).
VRL was paid a brand fee of $413 million in FY23, which equates to 3% of Vedanta Ltd's total revenue
Senior, secured, unlisted, and unrated bonds, backed by Vedanta's corporate guarantee and the pledge of Hindustan Zinc shares, are how Vedanta Semiconductors raised debt.
Vedanta Semiconductors has received funding of ₹594 Crore from Credit Solution India Ltd, sponsored by Varde Partners; ₹398.4 Crore from Robusta 4 Finance DAC and Burlington Loan Management, funded by Davidson Kempner; and ₹237.25 cr from Fort Canning Investments Pte, backed by the Kotak group.
Additionally, the business received ₹94.5 Crore from Sankhya Financial, an affiliate, and ₹149.3 Crore from Trust Investment Advisory. Also, it received ₹237.5 Crore from two funds managed by Alpha Alternatives Group.
The bond structure stipulates that investors will get a 10% interest coupon that is payable on a quarterly basis, along with a redemption premium of 5.1%.
On April 6, the Vedanta Semiconductors board resolved to issue ₹3,500 Crore in debt, which it intends to utilize to finance loans between companies.
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