Hindustan Zinc slips after Vedanta pledges stake

Hindustan Zinc fell 1.64% to Rs 225.10 after the company said that its promoter Vedanta created an encumbrance over the equity shares of the company.

Meanwhile, shares of Vedanta rose 1.16% to Rs 130.30 on the BSE. The S&P BSE Sensex lost 279.29 points or 0.71% to 39,188.02.

In a BSE filing made during market hours today, Hindustan Zinc said that Vedanta has tied up a long-term syndicated loan facility for Rs 10,000 crore with State Bank of India as facility agent and SBICAP Trustee Company as the security trustee with door to door maturity of 7 years.

State Bank of India has given a commitment of Rs 5,000 crore as a lender. The loan facility will increase company's average debt maturity profile and improve liquidity ratios as near term maturities are replaced by long term loan.

"The facility end use stipulates refinancing of near term debt maturities of Vedanta and for capital expenditure of Vedanta. This extends maturity profile, improves liquidity ratio and reinforces the commitment of lenders in the growth story of Vedanta," the company said in a statement.

The security is provided by way of a pledge over shares held by Vedanta in Hindustan Zinc, representing 14.8% of the paid-up share capital. It has also given a non-disposal undertaking in respect of its shareholding in Hindustan Zinc (HZL), to the extent of 50.1% of HZL's paid-up share capital, which are not pledged.

Hindustan Zinc is engaged in the mining and smelting of zinc, lead and silver metal in India. The firm's segments include mining and smelting of zinc, lead and silver, and wind energy.

The company's standalone net profit dropped 23% to Rs 1,359 crore on 20.83% decrease in revenue to Rs 3,898 crore in Q1 June 2020 over Q1 June 2019.

As on 30 June 2020, Vedanta held 64.98% stake in Hindustan Zinc.

In May 2020, Vedanta had sought shareholders' nod to delist after Anil Agarwal-controlled Vedanta Resources (VRL) offered to buyout about 49.9% of public shareholding at Rs 87.5 per share. Vedanta said that delisting will provide the group with enhanced operational and financial flexibility in a capital intensive business.

In June, shareholders approved the delisting proposal with requisite majority. Currently, promoters hold 50.14% in Vedanta.

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