S&P Global Ratings downgrades Vedanta Resources, puts it on credit watch

Vedanta to spin off, list six businesses to fuel growth

S&P Global Ratings downgraded the rating of Vedanta Resources, parent of India's Vedanta Ltd, to "CCC" from "B-" on Friday and placed it on credit watch with negative implications.

"We believe the likelihood has increased that Vedanta Resources will undertake a liability management exercise that we could consider distressed under our criteria," the rating agency said.

Earlier, Vedanta Ltd said it plans to spin off and list six of its businesses as the metals-to-oils conglomerate seeks to fuel their growth.

The six units being planned to be listed are Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited.

The demerger plans, aimed at driving better valuations, come as Vedanta Resources, the UK-based parent of the company, struggles to raise funds due to rating downgrades and concerns over meeting its debt obligations.

"By demerging our business units, we believe that will unlock value and potential for faster growth in each vertical," chairman Anil Agarwal said in a statement.

For each share of Vedanta Ltd, the stockholders will receive one additional share of each of the five companies that will be listed.

The entire restructuring process is expected to be completed by financial year 2025, subject to approvals. Filing with stock exchanges for approval from the country's markets regulator is expected during October 2023, Vedanta said.