Vedanta ties up funds to repay maturing debt

Part payment from internal cash generation and cash balances

London-listed Vedanta Resources has tied up funds to repay 95 per cent of its $4.1-billion debt, maturing in the current financial year.

The mining-metals-oil conglomerate, led by Anil Agarwal, had a gross debt of $17 billion as of March 2012, including $7.7-billion debt of its subsidiaries.

“About 95 per cent of the total debt to be repaid is already tied up and balance is in the advanced stages of tie-up,” a company spokesperson said in an e-mailed reply.

Replying to a query, he said, “A large part of the debt is planned to be repaid from committed long-term facilities. A portion of the debt maturing would be repaid from the internal cash generation and existing cash balances.”

 

According to a company presentation, the Anil Agarwal-led firm had refinanced $0.95-billion loans, out of the total $4.1-billion maturing debt in the year.

Besides, it had rolled more than $1.7-billion debt into long-term loans and would repay $0.3 billion through internal cash, while $0.7 billion was being used as revolving working capital facility, the presentation showed.

In 2011-12, the gross finance cost of Vedanta had increased by 63 per cent to $1.17 billion, largely due to increase in its average gross debt by $4.86 billion, which was used to acquire Cairn India. However, this also led to company announcing restructuring of its operations in February.

According to the restructuring exercise, Vedanta’s all operations, except Konkola Copper Mines in Zambia, would come under one roof, Sesa Sterlite, and was expected to be completed by December.

According to the presentation, this would also reduce company’s debt service liability by 61 per cent to $3.9 billion (from $9.8 billion of FY12) as it would be transferring majority of the loans, taken to acquire Cairn India, to Sesa Sterlite.

Besides, its debt service cost would get reduced to $190 million in the current financial year from $500 million of 2011-12.

The company, which was at present sitting on cash and cash equivalents of $6.9 billion, also had undrawn funding facilities of $2.9 billion, the presentation showed.