Vedanta Sources Ltd faces a second of reckoning this week as Indian billionaire Anil Agarwal’s miner seeks approval for a proposal that might assist it purchase extra time to honor its debt liabilities.
Bondholders have till Jan. 2 to offer an early consent on a plan to push out due dates on $3.2 billion in bond repayments, a transfer that prompted S&P World Rankings in December to chop the corporate’s score deeper into junk.
Vedantawants a inexperienced mild from at the least two-thirds of the bondholders in every of the three securities to proceed with the plan. A holder assembly might be held on January 4.
The bid to revise the phrases of its greenback bonds marks the newest try by Agarwal’s group to bolster its steadiness sheet, having already bought a stake in its Mumbai-listed subsidiary and secured a $1.25 billion personal mortgage. However the reality Vedanta borrowed cash at 18% to refinance debt underscores considerations about its funds.
What’s Vedanta’s newest proposal to chop its debt load?
The miner is providing to pay $779 million by early February for notes due this yr and 2025, and plans to increase the maturity on the remaining principal by as many as 4 years.
There isn’t a proposed change to the principal quantity or the coupon on notes due in April 2026. The miner is in search of approval to revise the mounted cost protection ratio, a leverage covenant.
What are S&P World and bondholders saying?
S&P reduce Vedanta Sources’ score to CC from CCC, saying the transfer will probably lead to a downgrade to selective default. Nonetheless, it expects “good earnings and robust money flows” on the group as commodity costs enhance and its Indian models ship again $400 million-$500 million in dividends annually — a key supply of funds for the UK-based mum or dad.
A bunch of adhoc holders of the corporate’s assured notes have mentioned that the agency didn’t embrace any suggestions from them, and due to this fact the proposal doesn’t symbolize the perfect phrases attainable for the notes. Vedanta responded saying that it has engaged with many noteholders earlier than arriving on the plan.
The miner additionally prolonged consent deadline for all of the three greenback bonds by a number of days to accommodate suggestions from bondholders who have been going through operational challenges amid year-end holidays.
What ought to bondholders do?
Analysis agency CreditSights recommends bondholders give their consents for the amendments as a result of the revised phrases are extra enticing.
However S&P World is skeptical.
That’s as a result of Vedanta hasn’t offered sufficient compensation for the extension of maturities, the rankings assessor mentioned. The corporate can also be prioritizing money flows and proceeds from asset gross sales to fulfill obligations from the $1.25 billion credit score facility over the opposite collectors, S&P added.
If Vedanta fails to get the required help, the main target will shift to the corporate’s capacity to honor its $1 billion bond due January 21.
The greenback notes due this month have been essentially the most supportive of the agency’s legal responsibility administration train, whereas the remaining three commerce beneath the 80 cents on the greenback mark typically thought-about indicative of misery.
Some Vedanta Bonds Commerce in Distressed Territory
Nonetheless, the bond due in August 2024 rose 3.5 cents on the greenback in December to 66.4 cents, in keeping with Bloomberg-compiled information. That’s the largest month-to-month acquire since September. These on March 2025 notes superior 3.1 cents to 74.4 cents.
How did the corporate grow to be such a giant participant?
Agarwal, who was raised within the Indian state of Bihar, took over his father’s enterprise making aluminum conductors within the Seventies, after which branched into buying and selling scrap metallic.
He constructed Vedanta Ltd. by means of a collection of bold acquisitions: In 2001, Agarwal purchased a controlling stake in then government-owned Bharat Aluminium Co. and he adopted that up with the acquisition of one other state-run agency, Hindustan Zinc. He efficiently bid for iron ore producer Sesa Goa Ltd. in 2007 and for Cairn India. Vedanta Sources additionally owns copper and zinc operations in Africa.
The corporate was the primary in India to checklist in London again in 2003, earlier than Agarwal took it personal 15 years later when his Vedanta Inc. purchased out minority buyers as a part of efforts to streamline the group’s construction. Agarwal has renamed Volcan Investments Ltd. to Vedanta Inc.
It’s this acquisition spree that prompted the conglomerate’s debt to balloon.
Bondholders have till Jan. 2 to offer an early consent on a plan to push out due dates on $3.2 billion in bond repayments, a transfer that prompted S&P World Rankings in December to chop the corporate’s score deeper into junk.
Vedantawants a inexperienced mild from at the least two-thirds of the bondholders in every of the three securities to proceed with the plan. A holder assembly might be held on January 4.
The bid to revise the phrases of its greenback bonds marks the newest try by Agarwal’s group to bolster its steadiness sheet, having already bought a stake in its Mumbai-listed subsidiary and secured a $1.25 billion personal mortgage. However the reality Vedanta borrowed cash at 18% to refinance debt underscores considerations about its funds.
What’s Vedanta’s newest proposal to chop its debt load?
The miner is providing to pay $779 million by early February for notes due this yr and 2025, and plans to increase the maturity on the remaining principal by as many as 4 years.
There isn’t a proposed change to the principal quantity or the coupon on notes due in April 2026. The miner is in search of approval to revise the mounted cost protection ratio, a leverage covenant.
What are S&P World and bondholders saying?
S&P reduce Vedanta Sources’ score to CC from CCC, saying the transfer will probably lead to a downgrade to selective default. Nonetheless, it expects “good earnings and robust money flows” on the group as commodity costs enhance and its Indian models ship again $400 million-$500 million in dividends annually — a key supply of funds for the UK-based mum or dad.
A bunch of adhoc holders of the corporate’s assured notes have mentioned that the agency didn’t embrace any suggestions from them, and due to this fact the proposal doesn’t symbolize the perfect phrases attainable for the notes. Vedanta responded saying that it has engaged with many noteholders earlier than arriving on the plan.
The miner additionally prolonged consent deadline for all of the three greenback bonds by a number of days to accommodate suggestions from bondholders who have been going through operational challenges amid year-end holidays.
What ought to bondholders do?
Analysis agency CreditSights recommends bondholders give their consents for the amendments as a result of the revised phrases are extra enticing.
However S&P World is skeptical.
That’s as a result of Vedanta hasn’t offered sufficient compensation for the extension of maturities, the rankings assessor mentioned. The corporate can also be prioritizing money flows and proceeds from asset gross sales to fulfill obligations from the $1.25 billion credit score facility over the opposite collectors, S&P added.
If Vedanta fails to get the required help, the main target will shift to the corporate’s capacity to honor its $1 billion bond due January 21.
The greenback notes due this month have been essentially the most supportive of the agency’s legal responsibility administration train, whereas the remaining three commerce beneath the 80 cents on the greenback mark typically thought-about indicative of misery.
Some Vedanta Bonds Commerce in Distressed Territory
Nonetheless, the bond due in August 2024 rose 3.5 cents on the greenback in December to 66.4 cents, in keeping with Bloomberg-compiled information. That’s the largest month-to-month acquire since September. These on March 2025 notes superior 3.1 cents to 74.4 cents.
How did the corporate grow to be such a giant participant?
Agarwal, who was raised within the Indian state of Bihar, took over his father’s enterprise making aluminum conductors within the Seventies, after which branched into buying and selling scrap metallic.
He constructed Vedanta Ltd. by means of a collection of bold acquisitions: In 2001, Agarwal purchased a controlling stake in then government-owned Bharat Aluminium Co. and he adopted that up with the acquisition of one other state-run agency, Hindustan Zinc. He efficiently bid for iron ore producer Sesa Goa Ltd. in 2007 and for Cairn India. Vedanta Sources additionally owns copper and zinc operations in Africa.
The corporate was the primary in India to checklist in London again in 2003, earlier than Agarwal took it personal 15 years later when his Vedanta Inc. purchased out minority buyers as a part of efforts to streamline the group’s construction. Agarwal has renamed Volcan Investments Ltd. to Vedanta Inc.
It’s this acquisition spree that prompted the conglomerate’s debt to balloon.
