Vedanta Resources Ltd. secures $1.25 billion for debt refinancing and credit facilities

In a strategic move, Vedanta Resources Ltd., the parent company of Vedanta Ltd., has successfully secured $1.25 billion from private lenders for debt refinancing and a new credit facility. This financial maneuver aims to establish a robust long-term capital structure for the company.

As part of this initiative, VRL has initiated discussions to extend its debt maturity profile, contemplating an extension of maturity dates in collaboration with its bondholders. Notably, the loan is slated to mature in April 2026.

However, the company faced a setback on Thursday, 14 December 2023, when Standard and Poor’s (S&P) Global Ratings downgraded Vedanta Resources Ltd.’s long-term issuer rating and bonds from “CCC” to “CC.” This downgrade is attributed to a potential transaction involving the extension of the maturities of three dollar-denominated bonds totaling $3.2 billion. The “CC” rating reflects a highly vulnerable status. S&P conveyed its perspective, asserting that they regarded Vedanta Resources' proposed liability management exercise, which involves three of its US dollar-denominated bonds totaling $3.2 billion, as a distressed transaction under their criteria.

The affected bonds are originally due in January 2024, August 2024, and March 2025. In response to this challenge, Vedanta Resources Ltd. plans to address these maturities through a combination of cash and new bonds. Specifically, about half of the January 2024 bond will be exchanged with new bonds maturing in January 2027, while the majority of the August 2024 and March 2025 bonds will be swapped with new amortizing bonds maturing in December 2028.

In related news, the company announced on Wednesday, 13 December 2023, that its board is scheduled to convene on 18 December 2023, to approve the second interim dividend, if any, for the fiscal year 2023–24. The record date for the dividend has been fixed at 27 December 2023.

As of 10:25 am on Thursday, 14 December 2023, Vedanta Ltd.’s shares were trading 0.26% lower at Rs. 252.55 apiece on the BSE, reflecting the ongoing market dynamics.