Vedanta's parent company raises $450 million from two competitors

2 Jun 2023 , 11:50 AM

According to news reports, the parent company of Vedanta Ltd, Vedanta Resources Ltd (VRL), has raised $450 million from two of its rivals, illustrating the difficulties the corporation has had in trying to obtain financing through more conventional avenues like banks and private loans.

Trafigura Group, a commodity trading firm, has provided $200 million in funding for VRL, while Glencore International AG, a mining and natural resource corporation, has provided $250 million.

According to a research report released by Nomura, the cash from Trafigura will be used to cover Oaktree’s $150 million loan. According to stock exchange records, 4.4% of listed Vedanta Ltd. was pledged to secure the loan from Glencore.

In addition, Nomura predicted that VRL will raise $1 billion in new capital to pay back its 13.875% notes when they became due in the fourth quarter of this fiscal year.

In an interview with the Financial Times on March 8, the chairman of Vedanta, Anil Agarwal, dismissed worries about looming debt payments. According to the newspaper’s citation of him, ‘$1 billion is peanuts for us’ and ‘Everyone wants to lend to us.’

Agarwal has reportedly pledged his whole 68.11% stake in Vedanta Ltd., according to stock exchange records, in order to obtain money. In a statement submitted by VRL to the Singapore Stock Exchange on Wednesday, Vedanta stated that ‘it intends to lower gross debt to zero.’ In addition, VRL said that as of March 31, its gross debt has decreased from $9.7 billion to $6.4 billion.

A portion of this was due to Vedanta Ltd.’s significant dividend payments that were up streamed to VRL. Five dividends totalling Rs 37,730 crore were paid by Vedanta Ltd in FY23, of which Rs 25,700 crore were up streamed to VRL.

In a 26 April ET interview, Agarwal stated, ‘In the last 25 years, we have never defaulted even one time. There has been excessive discussion of our debt.

In April 2021, Finsider International Co. Ltd., Westglobe, and Vedanta Holding Mauritius raised $750 million from Oaktree together. This so-called Oaktree box loan was secured by shares of Vedanta Ltd. Vedanta paid back $250 million of the Oaktree loan in April, and it is now getting ready to pay back another $150 million.

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