Vedanta: Vedanta expects to raise over $3.2 billion in bonds from investors
Vedanta Resources Limited Indian billionaires face moment of reckoning this week Anil AggarwalThe US miner wants approval for a proposal that would give it more time to pay off its loan liabilities.
Bondholders have until Jan. 2 to quickly agree to a plan to move up the due dates on $3.2 billion of bond repayments, a move that prompted S&P Global Ratings to further downgrade the company to junk in December. Inspired to put in.
VedantaThe plan requires a green signal from at least two-thirds of bondholders in each of the three securities to go ahead. The holders’ meeting will be held on January 4.
The bid to revise the terms of its dollar bonds marks the latest attempt by the Agarwal Group to strengthen its balance sheet, which has already sold stake in its Mumbai-listed subsidiary and raised a $1.25 billion private loan Is. But the fact that Vedanta borrowed money at 18% to refinance the debt underlines concerns about its finances.
What is Vedanta’s latest proposal to cut its debt load?
The miner is offering to pay $779 million by early February for notes due this year and 2025, and plans to extend the maturity on the remaining principal by four years.
There are no proposed changes to the principal amount or coupon on the Notes due April 2026. The miner is seeking approval to modify the fixed fee coverage ratio, a leverage contract.
What are S&P Global and bondholders saying?
S&P downgraded Vedanta Resources to CC from CCC and said the move is likely to result in a downgrade in selective default. Still, it expects “good earnings and strong cash flows” across the group as commodity prices improve and its Indian units send back $400 million-$500 million in dividends each year – a wealth for the UK-based parent. Is a major source of.
A group of ad hoc holders of the Company’s guaranteed notes have stated that the Company has not incorporated any feedback from them, and therefore the offer does not represent the best possible terms for the notes. Vedanta responded by saying it had held discussions with a number of noteholders before arriving at the plan.
The miner extended the consent deadline for all three dollar bonds by a few days to accommodate the reaction of bondholders facing operational challenges amid the year-end holidays.
What should bondholders do?
Research firm CreditSights suggests that bondholders give their consent to the amendments because the revised terms are more attractive.
But S&P Global is skeptical.
This is because Vedanta has not provided adequate compensation for the extension of the maturity period, the rating assessor said. S&P said the company is also prioritizing cash flows and proceeds from asset sales to meet obligations from the $1.25 billion credit facility over other creditors.
If Vedanta fails to get the necessary support, focus will shift to the company’s ability to repay its $1 billion bonds due on January 21.
Dollar notes due this month were most supportive of the firm’s liability management practice, while the remaining three trading below 80 cents on the dollar mark is often considered a sign of distress.
Some Vedanta bonds trade in distressed territory
Still, bonds due in August 2024 rose 3.5 cents to 66.4 cents on the dollar in December, according to Bloomberg-compiled data. This is the biggest monthly gain since September. Notes due March 2025 rose 3.1 cents to 74.4 cents.
How did the company become such a big player?
Agarwal, who was raised in the Indian state of Bihar, took over his father’s aluminum conductor manufacturing business in the 1970s and then moved into scrap metal trading.
He built Vedanta Limited through a series of ambitious acquisitions: in 2001, Agarwal bought a controlling stake in the then government-owned Bharat Aluminum Company and he followed this with the purchase of another state-run firm, Hindustan Zinc. He successfully bid for iron ore producer Sesa Goa Limited and Cairn India in 2007. Vedanta Resources also owns copper and zinc operations in Africa.
The company was the first in India to be listed in London in 2003, before Agarwal took it private 15 years later when his Vedanta Inc. bought out minority investors as part of efforts to streamline the group’s structure. . Aggarwal has changed the name of Volcan Investments Limited to Vedanta Inc.
It is this acquisition spree that has led to the group’s debt increasing.
Bondholders have until Jan. 2 to quickly agree to a plan to move up the due dates on $3.2 billion of bond repayments, a move that prompted S&P Global Ratings to further downgrade the company to junk in December. Inspired to put in.
VedantaThe plan requires a green signal from at least two-thirds of bondholders in each of the three securities to go ahead. The holders’ meeting will be held on January 4.
The bid to revise the terms of its dollar bonds marks the latest attempt by the Agarwal Group to strengthen its balance sheet, which has already sold stake in its Mumbai-listed subsidiary and raised a $1.25 billion private loan Is. But the fact that Vedanta borrowed money at 18% to refinance the debt underlines concerns about its finances.
What is Vedanta’s latest proposal to cut its debt load?
The miner is offering to pay $779 million by early February for notes due this year and 2025, and plans to extend the maturity on the remaining principal by four years.
There are no proposed changes to the principal amount or coupon on the Notes due April 2026. The miner is seeking approval to modify the fixed fee coverage ratio, a leverage contract.
What are S&P Global and bondholders saying?
S&P downgraded Vedanta Resources to CC from CCC and said the move is likely to result in a downgrade in selective default. Still, it expects “good earnings and strong cash flows” across the group as commodity prices improve and its Indian units send back $400 million-$500 million in dividends each year – a wealth for the UK-based parent. Is a major source of.
A group of ad hoc holders of the Company’s guaranteed notes have stated that the Company has not incorporated any feedback from them, and therefore the offer does not represent the best possible terms for the notes. Vedanta responded by saying it had held discussions with a number of noteholders before arriving at the plan.
The miner extended the consent deadline for all three dollar bonds by a few days to accommodate the reaction of bondholders facing operational challenges amid the year-end holidays.
What should bondholders do?
Research firm CreditSights suggests that bondholders give their consent to the amendments because the revised terms are more attractive.
But S&P Global is skeptical.
This is because Vedanta has not provided adequate compensation for the extension of the maturity period, the rating assessor said. S&P said the company is also prioritizing cash flows and proceeds from asset sales to meet obligations from the $1.25 billion credit facility over other creditors.
If Vedanta fails to get the necessary support, focus will shift to the company’s ability to repay its $1 billion bonds due on January 21.
Dollar notes due this month were most supportive of the firm’s liability management practice, while the remaining three trading below 80 cents on the dollar mark is often considered a sign of distress.
Some Vedanta bonds trade in distressed territory
Still, bonds due in August 2024 rose 3.5 cents to 66.4 cents on the dollar in December, according to Bloomberg-compiled data. This is the biggest monthly gain since September. Notes due March 2025 rose 3.1 cents to 74.4 cents.
How did the company become such a big player?
Agarwal, who was raised in the Indian state of Bihar, took over his father’s aluminum conductor manufacturing business in the 1970s and then moved into scrap metal trading.
He built Vedanta Limited through a series of ambitious acquisitions: in 2001, Agarwal bought a controlling stake in the then government-owned Bharat Aluminum Company and he followed this with the purchase of another state-run firm, Hindustan Zinc. He successfully bid for iron ore producer Sesa Goa Limited and Cairn India in 2007. Vedanta Resources also owns copper and zinc operations in Africa.
The company was the first in India to be listed in London in 2003, before Agarwal took it private 15 years later when his Vedanta Inc. bought out minority investors as part of efforts to streamline the group’s structure. . Aggarwal has changed the name of Volcan Investments Limited to Vedanta Inc.
It is this acquisition spree that has led to the group’s debt increasing.
