MUMBAI: Billionaire Anil Agarwal Vedanta Resources Ltd is looking for money. The junk-rated mining conglomerate has approached investors to restructure about $3 billion of bonds due in 2024 and 2025 as it breaks up its sprawling group to unlock more value for individual companies. But debt investors aren’t convinced and the group’s dollar bonds are plummeting.
What is the plan to overhaul the group?
Indian unit Vedanta Ltd last week approved a plan to split its operations into six listed companies: aluminum, oil and gas, energy, steel and ferrous, base metals and an incubator for new businesses including semiconductors. The reorganization is intended to give investors direct exposure to a company of their choice and improve the value of the group’s constituents.
A streamlined structure could also help Agarwal sell unprofitable or low-growth assets – something the billionaire has long avoided.
Vedanta expects to complete the transaction in the fiscal year ending March 2025.
What is the state of Vedanta’s finances?
The conglomerate will have to repay $3.2 billion in bonds over the next two years. About $2 billion in notes are due in 2024 – half of which are due as early as January – and another $1.2 billion in 2025, according to data compiled by Bloomberg.
To repay bonds, Vedanta Resources also started talks with lenders such as Cerberus Capital Management LP for a $1 billion private loan. But the proposal to incorporate Vedanta Ltd. splitting up has complicated the business.
Moody’s Investors Service and S&P Global Ratings have already downgraded Vedanta Resources deeper into the junk category.
What does Anil Agarwal say?
Vedanta’s chairman said on Tuesday that the group had funds ready for the repayment of the 2024 bonds and that an announcement would be made soon. If terms were favorable, Vedanta would refinance the debt, he said. “But we are also looking at whether we can pay from our side.”
What does the market say?
While equity investors gave the demerger plan a thumbs up, Vedanta’s dollar bonds have tumbled. Of the four notes, three are trading below the 80 cents per dollar mark typically considered distressed.
The demerger does not immediately affect Vedanta’s maturing foreign bonds. The group has yet to provide details on exactly how debt will be spread under the new structure, or how the shares currently used as collateral will be treated. Vedanta Resources has almost all of its majority stakes in both Vedanta Ltd., according to stock exchange data. as Hindustan Zinc Ltd. promised.
“The consolidated debt for all its proposed entities will still remain the same,” said CreditSights analysts led by Lakshmanan R. “We remain concerned that the precarious debt situation at Vedanta Resources has still not been addressed.”
How did the company become such a big player?
Agarwal, who grew up in the Indian state of Bihar, took over his father’s company in the 1970s, where he made aluminum conductors, and then focused on the scrap trade.
He built Vedanta Ltd through a series of ambitious acquisitions: in 2001, Agarwal bought a majority stake in the then government-owned Bharat Aluminum Co and followed that up with the purchase of another state-owned company, Hindustan Zinc. He successfully bid for iron ore producer Sesa Goa Ltd in 2007. and on Cairn India. Vedanta Resources also owns copper and zinc operations in Africa.
The company was the first in India to list in London in 2003, before Agarwal took it private fifteen years later when his now famous Vedanta Inc. minority investors as part of efforts to streamline the group’s structure. Agarwal has renamed Volcan Investments Ltd as Vedanta Inc.
It is this wave of acquisitions that has caused the conglomerate’s debts to skyrocket. Vedanta Resources’ total debt stood at $6.4 billion at the end of June.
Will the split go ahead?
The plan, which is subject to multiple government and regulatory approvals, is “far from a done deal,” Standard Chartered’s head of Asia Corporate Credit Research Bharat Shettigar wrote in a note.
Vedanta Ltd will follow rules as prescribed by corporate and tax laws while allocating debt to demerged companies, Finance President Ajay Agarwal said in an investor conference call last week. The company will consult with lenders during the process, he said.
What are the next milestones?
An implementation timeline indicates that lenders will give their views on the plan by the end of this financial year, with a submission to the National Company Law Tribunal expected by the end of 2023. The NCLT order is expected to be received in July, with the listing of the new subsidiaries in September.
As for payments, Vedanta Resources’ 2026 bond has interest due on Oct. 23, according to data compiled by Bloomberg.
What is the plan to overhaul the group?
Indian unit Vedanta Ltd last week approved a plan to split its operations into six listed companies: aluminum, oil and gas, energy, steel and ferrous, base metals and an incubator for new businesses including semiconductors. The reorganization is intended to give investors direct exposure to a company of their choice and improve the value of the group’s constituents.
A streamlined structure could also help Agarwal sell unprofitable or low-growth assets – something the billionaire has long avoided.
Vedanta expects to complete the transaction in the fiscal year ending March 2025.
What is the state of Vedanta’s finances?
The conglomerate will have to repay $3.2 billion in bonds over the next two years. About $2 billion in notes are due in 2024 – half of which are due as early as January – and another $1.2 billion in 2025, according to data compiled by Bloomberg.
To repay bonds, Vedanta Resources also started talks with lenders such as Cerberus Capital Management LP for a $1 billion private loan. But the proposal to incorporate Vedanta Ltd. splitting up has complicated the business.
Moody’s Investors Service and S&P Global Ratings have already downgraded Vedanta Resources deeper into the junk category.
What does Anil Agarwal say?
Vedanta’s chairman said on Tuesday that the group had funds ready for the repayment of the 2024 bonds and that an announcement would be made soon. If terms were favorable, Vedanta would refinance the debt, he said. “But we are also looking at whether we can pay from our side.”
What does the market say?
While equity investors gave the demerger plan a thumbs up, Vedanta’s dollar bonds have tumbled. Of the four notes, three are trading below the 80 cents per dollar mark typically considered distressed.
The demerger does not immediately affect Vedanta’s maturing foreign bonds. The group has yet to provide details on exactly how debt will be spread under the new structure, or how the shares currently used as collateral will be treated. Vedanta Resources has almost all of its majority stakes in both Vedanta Ltd., according to stock exchange data. as Hindustan Zinc Ltd. promised.
“The consolidated debt for all its proposed entities will still remain the same,” said CreditSights analysts led by Lakshmanan R. “We remain concerned that the precarious debt situation at Vedanta Resources has still not been addressed.”
How did the company become such a big player?
Agarwal, who grew up in the Indian state of Bihar, took over his father’s company in the 1970s, where he made aluminum conductors, and then focused on the scrap trade.
He built Vedanta Ltd through a series of ambitious acquisitions: in 2001, Agarwal bought a majority stake in the then government-owned Bharat Aluminum Co and followed that up with the purchase of another state-owned company, Hindustan Zinc. He successfully bid for iron ore producer Sesa Goa Ltd in 2007. and on Cairn India. Vedanta Resources also owns copper and zinc operations in Africa.
The company was the first in India to list in London in 2003, before Agarwal took it private fifteen years later when his now famous Vedanta Inc. minority investors as part of efforts to streamline the group’s structure. Agarwal has renamed Volcan Investments Ltd as Vedanta Inc.
It is this wave of acquisitions that has caused the conglomerate’s debts to skyrocket. Vedanta Resources’ total debt stood at $6.4 billion at the end of June.
Will the split go ahead?
The plan, which is subject to multiple government and regulatory approvals, is “far from a done deal,” Standard Chartered’s head of Asia Corporate Credit Research Bharat Shettigar wrote in a note.
Vedanta Ltd will follow rules as prescribed by corporate and tax laws while allocating debt to demerged companies, Finance President Ajay Agarwal said in an investor conference call last week. The company will consult with lenders during the process, he said.
What are the next milestones?
An implementation timeline indicates that lenders will give their views on the plan by the end of this financial year, with a submission to the National Company Law Tribunal expected by the end of 2023. The NCLT order is expected to be received in July, with the listing of the new subsidiaries in September.
As for payments, Vedanta Resources’ 2026 bond has interest due on Oct. 23, according to data compiled by Bloomberg.
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