Vedanta parent raises $450 million from two rivals

Mumbai: Vedanta Ltd's parent Vedanta Resources Ltd (VRL) has raised $450 million from two of its rivals, reflecting the challenges faced by the group in seeking to borrow through more traditional channels such as banks and private credit, according to metal analysts.

VRL has raised $200 million in finance from commodities trading company Trafigura Group and $250 million from mining and natural resources company Glencore International AG.

The money from Trafigura will be used to make debt repayments of $150 million to Oaktree, a research report issued by Nomura stated. The loan from Glencore, reported in stock exchange disclosures, was raised by pledging 4.4% of listed Vedanta Ltd.

Vedanta did not respond to queries.

Nomura also stated that VRL is likely to raise fresh funding of $1 billion to finance repayments due on its 13.875% bonds in the fourth quarter of this fiscal year.

Vedanta chairman Anil Agarwal had dismissed concerns over upcoming debt payments in a March 8 interview with the Financial Times. The paper cited him as saying, "Everyone wants to lend to us" and "$1 billion is peanuts for us."

According to stock exchange disclosures, Agarwal has pledged his entire holding of 68.11% in Vedanta Ltd to raise funding. According to a statement released by VRL on Wednesday to the Singapore Stock Exchange, Vedanta said that "it intends to lower gross debt to zero." VRL also announced that it had cut gross debt to $6.4 billion on March 31, down from $9.7 billion a year ago.

Part of this came from substantial dividends paid by Vedanta Ltd, which were upstreamed to VRL. Vedanta Ltd paid five dividends in FY23 amounting to ₹37,730 crore, of which ₹25,700 crore was upstreamed to VRL.

Agarwal said in an April 26 ET interview, "In the last 25 years, we have not defaulted even once. There has been disproportionate talk about our debt."

Vedanta Holding Mauritius, Westglobe and Finsider International Co Ltd had jointly raised $750 million from Oaktree in April 2021. This borrowing, known as the Oaktree box, was against Vedanta Ltd share pledges. In April, Vedanta had repaid $250 million of the Oaktree loan and is now preparing to repay another $150 million.