Vedanta seeking $1 bn from global banks to refinance old debt, say sources

Is negotiating with Barclays, JP Morgan, StanChart; fresh fund raising comes within months of the firm having deleveraged its balance sheet by $2 bn

Mining and metal major Vedanta is in talks with international banks including Barclays, JP Morgan and StanChart to raise up to $1 billion. The proceeds would be used to refinance old loans, say banking sources.

The fresh fund raising comes within months of the company having announced that it has deleveraged its balance sheet to the tune of $2 billion and will meet all its future debt requirements on time.

When contacted, a spokesperson said Vedanta is confident of meeting its upcoming maturities in quarter ending June 23. "We have multiple options for both refinancing and repayment through internal accruals. We are at advanced stage in tying up required financing through a $1 billion fresh loan from a syndicate of banks," the spokesperson said. The consolidated debt of Vedanta Resources, the parent firm of Vedanta Ltd, is $11.8 billion.

Vedanta shares closed 5 per cent up at Rs 289 a share.

Rating firm S&P had said Vedanta Resources is fully funded until March 2023, following a dividend declared by Vedanta in January. But Vedanta Resources would need to raise a minimum $500 million to meet its obligations until June.

Debt repayments during this period include $300 million of inter-company loans and $350 million to two relationship banks, the rating firm had said.

Analysts at broking firm Emkay said VRL's high leverage is a blessing in disguise for Vedanta shareholders. VRL, it said, is largely dependent on cash flows from Vedanta, which has to upstream large dividends to VRL. "We expect Vedanta to pay out dividends of Rs 80/50 per share in FY24/25 which translates to a cumulative yield of 40 per cent," Emkay said in a note to its clients.