Anil Agarwal-led Vedanta Resources’ Ltd is in talks with Deutsche Bank and other global lenders, including JPMorgan and Barclays, to raise a $500-600 million loan after delays in securing funds from Farallon Capital Management to meet its obligations later this month, according to a report. The company aims to borrow the money through its Zinc International unit.
A $500-million repayment is due on a 7.125 per cent bond that matures on May 31. “Vedanta is currently in discussions with Deutsche Bank and other global banks, including JPMorgan and Barclays, to secure a smaller loan compared to the loan from Farallon,” the Economic Times reported, citing sources privy to the development. “A bank loan is relatively more cost-effective when compared to the interest rate charged by a credit fund.”
The lenders will charge Secured Overnight Financing Rate (SOFR) + 800 basis points. At present, the SOFR is at 5.06 per cent. The company was in discussions with global banks to raise $1 billion. However, VRL had lowered its sights because of the high interest cost. Plus, lenders had highlighted the need for a guarantee from Vedanta Ltd for a larger loan, for which the latter has sought approval from the Reserve Bank of India (RBI).
Vedanta also was negotiating with banks and credit funds to refinance June quarter debt obligations of $1.8 billion. It counted on dividends from units to meet April repayments of $400 million. Last month, VRL secured about $600 million as dividend from Hindustan Zinc (HZL).
Earlier this week, Vedanta appointed Sonal Shrivastava as its new chief financial officer (CFO). She joins the company from June 1, 2023.
In a filing to BSE, Vedanta said a meeting of its board is “proposed to be scheduled on Monday, May 22, 2023, to consider and approve the first interim dividend on equity shares, if any, for the financial year 2023-24. Please note that the record date for the purpose of determining the entitlement of the equity shareholders for the said dividend, if declared, is being fixed as Tuesday, May 30, 2023,” it mentioned.
Recently, Vedanta logged 57 per cent drop in March quarter (Q4) net profit on weakness in aluminium business and write-offs. The company’s consolidated net profit of Rs 3,132 crore in January-March is compared with Rs 7,261 crore net earning in the same period a year back.