Shares of Vedanta Ltd climbed 6 per cent in Friday's trade as the mining giant updated stock exchanges about the release of encumbrance over its equity shares by parent Vedanta Resources, through its subsidiaries Twin Star Holdings, Welter Trading Limited, Vedanta Holdings Mauritius (VHML), Vedanta Holdings Mauritius II (VHMLII) and Vedanta Netherlands Investments BV(VNIBV).
Vedanta shares climbed 5.99 per cent to hit a high of Rs 500.50 on BSE. Equirus Wealth recently initiated coverage on Vedanta with a target of Rs 560.
To recall, Vedanta Resources Finance II PLC, a subsidiary of VRL had issued $1,200,000,000, 13.875 per cent guaranteed senior bonds originally due 2025 and extended to 2028 guaranteed by VRL, Twin Star and Welter. This was amended and a restated trust deed was entered into on January 4 this year among the Vedanta Resources Finance II, VRL, Twin Star, Welter, Citicorp International Limited (trustee) and Axis Trustee Services Limited (onshore collateral agent”).
"Pursuant to the conditional redemption notice dated 18 November 2024, the issuer has, as on 4 December 2024, redeemed the entire outstanding amount of the bonds and all encumbrances created pursuant to the bonds and the trust deed have been released," Vedanta said in a press release.
"For completeness, it is clarified that no pledge had been created by any of the promoter group entities over the equity shares of Vedanta in relation to the bond," it said.
Citicorp International acted as trustee for the holders of the bonds. As per terms and conditions of the bonds and the trust deed, so long as the bonds were outstanding, the promoter group entities were not permitted to create any encumbrance over any assets directly held by them unless certain conditions are fulfilled.
VRL or any of its Subsidiaries were required to retain control over, or, directly or indirectly, own more than 50 per cent of the issued equity share capital of Vedanta.
Twin Star and Welter were allowed to dispose of or acquire shares of Vedanta only as specified; and the promoter group entities were allowed to dispose of their assets only as specified in an event of default.
"By virtue of the onshore collateral agent appointment agreement dated January 4, 2024, entered into between the Issuer and the Onshore Collateral Agent, in respect of the Bonds, Axis Trustee Services Limited had been appointed by the issuer as the onshore collateral agent for the Bonds, acting for and on behalf of the holders of the bonds," Vedanta said.
On September 29, 2023, Vedanta Ltd. announced a demerger to create six independent "pure play" entities, aiming to unlock value, attract investments, and enhance sector-specific strengths.
Equirus said each entity will benefit from focused strategies, capital allocation, and management autonomy, moving from centralized to independent operations.
"Investors can reallocate based on individual commodity outlooks, likely prompting a re-rating. With NCLT approval expected by March 2025, the demerger is positioned to drive long-term growth. Vedanta’s Rs 1.8 lakh crore market cap could potentially reach to Rs 3 lakh crore; post-demerger," Equirus said.