Vedanta close to raising $3 bn from JP Morgan, Standard Chartered: Report

The money will be used to escape default on Vedanta's upcoming payments

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Anil Agarwal's Vedanta Resources is in advanced discussions with JP Morgan Chase and Standard Chartered Bank to secure $3 billion, according to a report by Mint on Wednesday. The funds are intended to help the company avoid defaulting on its upcoming payments.

Vedanta Resources, which is the parent company of Vedanta Ltd, has bond repayments amounting to $3.1 billion due in the financial year 2024-25 (FY25). Notably, the UK-based firm received a dividend of $2.5 billion from Hindustan Zinc Ltd and Vedanta Ltd in the financial year 2022-23 (FY23).

To raise additional capital, the company has diluted a 6 per cent stake in Vedanta Ltd over the past year. Vedanta Resources' debt level was at $9.06 billion as of March 31, 2022, but has decreased to $5.9 billion as of June 2023.

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Last week, Vedanta announced that its board had approved a transition to a pure-play, asset-owner business model, eventually leading to the creation of six separate listed firms. This restructuring is anticipated to be completed within 12 to 15 months.

The parent company, Vedanta Resources, has experienced a series of rating downgrades due to concerns regarding its outstanding debt of $6.4 billion.

The new plan proposes the creation of five new listed companies—Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, and Vedanta Base Metals—in addition to Vedanta Ltd. "We believe the demerger will unlock value and enable faster growth in each vertical," Agarwal commented.

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In an interview conducted on Tuesday, Agarwal stated that Vedanta Ltd will conclude the sale of its steel assets by the end of this financial year. The company initiated a review of its steel and steel raw material business—acquired through the purchase of ESL Steel in 2018 for Rs 5,230 crore—in June, with the aim of divesting the company to focus on its core mining operations.