Key Points of Vedanta’s Repayment to StanChart:
- Vedanta announced the successful repayment of a $100 million facility to Standard Chartered Bank, resulting in the release of pledged shares.
- The agreement was signed in September 2022 between Twin Star Holding, Vedanta Resources, Welter Trading, Standard Chartered Bank (Singapore), and Standard Chartered Bank as an arranger and agent.
- Vedanta has been facing concerns from rating agencies about its ability to raise funds to pay back scheduled debt repayments later this year, leading to a drop in share and bond prices.
- Moody’s Investors Service has downgraded Vedanta Resources’ corporate family and unsecured bond ratings to Caa1 and Caa2, respectively, with a negative outlook on all ratings.
- Moody’s cited increasing refinancing risk and delays in refinancing efforts as reasons for the downgrade.
- Despite these concerns, Vedanta’s founder, Anil Agarwal, remains optimistic about the company’s funding options and aims to become a zero-debt company.
- Vedanta is involved in a dispute with the Indian government led by Narendra Modi over the sale of its international zinc asset to Hindustan Zinc, in which the government is a minority shareholder.
- Last month, Hindustan Zinc agreed to buy the unit THL Zinc Ltd (Mauritius) from its parent for $2.98 billion, seen as an attempt by Anil Agarwal to reduce Vedanta Resources’ debt.
Details of Vedanta’s Repayment to StanChart:
Vedanta Repays $100 Million Facility to Standard Chartered Bank, Releases Pledged Shares
Vedanta, the leading natural resources company, announced today that it has successfully repaid a $100 million facility to Standard Chartered Bank, as per the agreement signed between the two parties in September 2022. This repayment has resulted in the release of the pledged shares with StanChart Bank. The agreement was signed between Twin Star Holding as borrower, Vedanta Resources and Welter Trading as original guarantors, Standard Chartered Bank (Singapore) as original lender, and Standard Chartered Bank as arranger and agent, with the purpose of availing a facility of an aggregate amount of $100 million.
The announcement comes at a time when Vedanta has been in the spotlight due to concerns raised by some rating agencies regarding the company’s ability to raise funds to pay back its scheduled debt repayment later this year. This has led to a drop in share prices in recent weeks, which is also reflected in the bond prices of Vedanta Resources. Moody’s Investors Service has downgraded Vedanta Resources’ corporate family and unsecured bond ratings to Caa1 and Caa2, respectively, with a negative outlook on all ratings.
Moody’s stated that “the rating downgrades reflect the increasing refinancing risk surrounding holding company Vedanta Resources’ large debt maturities and ongoing delays in holdco VRL’s refinancing efforts, and its continued reliance on dividend receipts are depleting liquidity at its operating subsidiaries.”
Despite these concerns, Anil Agarwal, the founder of Vedanta, remains optimistic about the company’s funding options. He said, “The company has ample funding options, and it aims to become a zero-debt company.” He cited Indian banks and “American funds” as potential sources of financing, which he declined to name.
Apart from the debt payment issue, Vedanta is also involved in a dispute with the Indian government led by Narendra Modi over the sale of its international zinc asset to Hindustan Zinc, in which the government is a minority shareholder with over 29 percent stake. The government warned of legal action in a recent stock exchange filing and urged the company to explore other cashless methods for the acquisition of the assets.
Last month, Hindustan Zinc agreed to buy the unit, THL Zinc Ltd (Mauritius), from its parent for $2.98 billion in phases over 18 months. This move was seen as an attempt by billionaire Anil Agarwal to reduce Vedanta Resources’ debt after a failed attempt to delist Vedanta Ltd. in 2020.
While the Union government said it would vote against the proposal at the extraordinary general meeting (EGM), the company stated that it would engage with all minority shareholders and is looking to grow globally via acquisitions.
Headquartered in Mumbai, India, Vedanta is a multinational mining company with primary operations focused on mining iron ore, gold, and aluminum in various mines located in Goa, Karnataka, Rajasthan, and Odisha.
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