Vedanta parent looks to rejig $3.8 billion bond repayments; stock in focus

Shares of Vedanta Ltd will be in focus in Thursday’s trade amid a media report that suggested parent Vedanta Resources Ltd (VRL) has launched a liability management exercise in a bid to restructure repayments of around $3.8 billion on bonds, which are set to mature over the next three years. This is after VRL secured funds from a bank and private credit funds. As per a report by the Economic Times, the Anil Agarwal company was providing bondholders with various options to extend maturities and partially prepay three bonds.

Vedanta Resources, as a part of the plan, was looking to pledge 13 per cent of its stake in India-listed Vedanta Ltd to secure a $1.25 billion financing package from a cluster of lenders led by New York-based Cerberus Capital Management and Standard Chartered Bank, people familiar with the matter told ET. The move could help VRL avert a default on $1 billion of bonds, which are due in January.

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On Wednesday, India-listed Vedanta Ltd said its board would consider and approve second interim dividend for the ongoing financial year on Monday, December 18. Promoters held 63.71 per cent stake in India listed Vedanta Ltd.

Vedanta said, if approved, the record date for the dividend would be Wednesday, December 27. Vedanta had earlier in May declared its first interim dividend of Rs 18.50 per share. The stock had turned ex-dividend on May 30. The dividend payouts by Vedanta has jumped harply over the last few years, with the company declaring a total dividend of Rs 37,572 crore in FY23, Rs 16,689 crore in FY22 and Rs 3,519 crore in FY21.

On Wednesday, the Vedanta stock closed at Rs 253.20 on BSE, up 2.63 per cent. The scrip is down 19.9 per cent year-to-date amid concerns over possible delays in refinancing of the upcoming debt maturities of the parent company, beyond the expected timelines. Crisil last month downgraded its long-term rating on Rs 56,263.50-crore debt instruments and bank loan facilities of the Anil Agarwal-led company amid an "increased likelihood of Vedanta’s consolidated financial leverage (ratio of net debt-to-Ebitda) for the current fiscal remaining higher than the rating thresholds of 2.7 times."

It said Vedanta Resources was in the process of refinancing its bonds maturing in January 2024 ($1 billion), August 2024 ($0.95 billion) and March 2025 ($1.2 billion), which can potentially reduce the refinancing pressure on VRL, "thereby reducing the need for significantly large annual dividend payouts by Vedanta over the medium term."

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