Vedanta Pledges Stake In Hindustan Zinc To Raise Rs 10,000 Crore
The loan facility stipulates refinancing of near-term debt maturities of Vedanta and for its capital expenditure.
Vedanta Ltd. has pledged 14.8% stake in subsidiary Hindustan Zinc Ltd. to raise a long-term loan as the metals to mining conglomerate looks to replace short-term debt.
The billionaire Anil Agarwal-led company 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 Co. as the “security trustee” with door-to-door maturity of seven years, according to a corporate announcement by Hindustan Zinc on the bourses. SBI has given a commitment of Rs 5,000 crore as a lender.
The facility, the filing said, stipulates refinancing of near-term debt maturities of Vedanta and for its capital expenditure. “This extends maturity profile, improves liquidity ratio and reinforces the commitment of lenders in the growth story of Vedanta.”
At current market price of Rs 228.7 apiece, a 14.8% stake, or 63 crore shares, would have fetched a value of Rs 14,321 crore.
Vedanta has also given a non-disposal undertaking in respect of its shareholding in Hindustan Zinc to the extent of 50.1% of the subsidiary’s paid-up share capital, which are not pledged to secure the loan facility, the filing said.
While this comes at a time Vedanta Resource Plc. is looking to delist its main India unit., Ritesh Shah, research analyst at Investec Securities, said it will not mean much for the offer price. But it will improve the company’s debt maturity profile for refinancing non-convertible debentures/ commercial papers, he said.
The delisting is part of chairman Agarwal’s plan to simplify his investments across the complex multi-tiered corporate structure. Vedanta has interests in zinc, aluminum and oil and gas, all of which have been hit by volatile prices and concerns about weak demand for metals and hydrocarbons because of the coronavirus pandemic.
Vedanta has already received shareholders’ nod for delisting. Earlier this month, Vedanta Resources had raised $1.4 billion via bonds to support the delisting of its India unit. The bond issuance follows the commitment for $1.75 billion that Vedanta Resources had received for a three-month term loan facility. The total debt raised now stands at $3.15 billion.