Vedanta taps Oaktree, PSBs to refinance debt

Anil Agarwal-controlled Vedanta Resources is in talks with Oaktree Capital Management and government-owned banks to refinance its $2.5 billion debt maturing between January and June this year, senior company executives informed analysts last Friday evening.

The USD bondholders were jittery about timely payment because 100% of the promoter’s debt is pledged with lenders, and a delay in arranging refinance prompted Moody’s to downgrade ‘corporate family rating’ by one notch last October. Within days of a downgrade, Vedanta announced it would discontinue rating engagement with Moody’s.

Vedanta Resources Ltd (VRL), the parent company of India-listed Vedanta Ltd, has $400 million and $500 million bonds due in April and May, respectively. There is also aloan payment of $1.2 billion and interest payment of $400 million due in the first half of this calendar year.


Vedanta Ltd informed analysts that VRL is in talks with Oaktree to raise $750 million and with PSU banks for a term loan of $500 million. Sources said it is in negotiating terms with the State Bank of India and Union Bank of India. The combination of loans from Oaktree and PSU banks adds up to $1.2 billion.

“Reminder amount is a combination of brand fees, which you pay in the first quarter and dividend. So both for Q4, we are fully locked in,” Sunil Duggal, group chief executive officer, told analysts. The company also told analysts that the brand fee would be about $300 million.

Oaktree has already provided $750 million to the metal maker against the share pledge of promoter’s stake. Duggal spoke about upsizing by $750 million Oaktree loans.

At an earnings conference call of Vedanta Resources held mid-December 2022, VRL management informed analysts that they are in talks with Oaktree to refinance the USD bonds while adding that the collateral with them “is quite high, value is almost $2.8 billion-$3 billion”.

At the same earnings call, VRL management said they are in talks with Barclays to roll over the $150 million loans. The management also said it is committed to deleveraging its debt from $8 billion to $4 billion over three years.

Besides the $900 millionbond dues, VRL has to make payments of $250 million to Oaktree, $150 million to Barclays and $250 million inter-corporate deposits in the first half of this calendar year.

Hindustan Zinc, indirectly controlled by Anil Agarwal through Vedanta Ltd, and Vedanta Ltd, directly owned by Vedanta Resources, have substantial dividends this fiscal year.

Vedanta, 69% held by VRL and Anil Agarwal family, paid four dividends amounting to Rs 30,112 crore, while Hindustan Zinc, which is 65% owned by Vedanta, gave Rs 20,915 crore dividend this financial year.