Vedanta Holdco eyes up to $2 billion in bridge loans

New Delhi: An entity linked to Vedanta Resources is in talks with bulge-bracket global banks to garner up to $2 billion in bridge loans to finance bond redemptions and debt repayments due for the conglomerate's holding company and its associates over the next few months, multiple industry sources told ET.

Twin Star Holdings, a unit of the London-based Vedanta Resources, is talking to multiple global financiers such as JP Morgan, Barclays, Deutsche Bank and Standard Chartered for the bridge loans, the sources cited above said. These financiers are relationship banks for the Anil Agarwal-led conglomerate.

Twin Star Holdings, which is also the immediate holding company of the India-listed Vedanta, has previously acted as a guarantor for bonds issued by its parent Vedanta Resources.

Vedanta Resources did not respond to ET's queries. Individual banks could not be contacted.

Bloomberg said earlier this month that Asian companies had a cumulative $314 billion of debt due in 2023 in the form of US dollar-denominated bonds. It listed Vedanta Resources and property developers such as China's Evergrande Group among those with the heaviest US dollar debt.

$4.7B in Bonds Maturing over Next 4 Years
Vedanta has $4.7 billion in bonds maturing over the next four years, Bloomberg estimates showed.

Vedanta Resources is opting for bridge finance, a type of short-term financing, and the tenures could extend from a few months to up to two years. It eventually plans to clear debt from the receipts of the sale of its global zinc assets to Hindustan Zinc. It had announced the sale in a stock exchange disclosure last week.

As per the disclosure made by Hindustan Zinc, the company has got board approval to purchase shares of THL Zinc, Mauritius, which comprises shares held in Black Mountain Mining Pty, South Africa, and THL Zinc Namibia Holdings (Pty) for $2.9 billion. The transaction is proposed to be carried out through a wholly owned subsidiary of Hindustan Zinc. Black Mountain Mining is located in Aggeneys, a mining town in the Northern Cape in South Africa. The Namibian zinc assets are located in Rosh Pinah, a mining town in Namibia where the unlisted Vedanta Resources has a zinc refinery.

As per Vedanta's own estimates, the deal for the purchase of the zinc assets could take up to 18 months to complete. Once it is completed, Vedanta Resources could use the proceeds to clear a large chunk of the holding company's near to medium-term debt. Until then, the bridge loans will help tide over the immediate repayment demands of creditors.

As per estimates, Vedanta Resources would have to redeem up to $900 million in bonds by May this year. It had contemplated a tender offer to buy back some of those bonds in July last year, but didn't go ahead with the plan due to choppy bond markets triggered by the US Federal Reserve's rate moves.