Wednesday, December 6, 2023

Vedanta: Vedanta bondholders set high payout bar, want promoter to contribute capital, too

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Mumbai: A group of Vedanta Resources (VRL) bond investors demanded the company pay at least 75% of the principal and interest on the bonds maturing in January next year and 25% on those maturing in March 2025.For the remaining portion of the two bonds maturing in 2024 and 2025, investors want fresh notes valued at 1.3 of each existing bond.

The proposal was sent by Cleary Gottlieb Steen & Hamilton LLP, a law firm, on behalf of the bondholders holding 25% of $1 billion bonds maturing in January 2024 and $1.2 billion in March 2025. The group said they together hold the blocking stake in each of the bonds. “The refinancing of upcoming maturities continues to be something that the company is working on. No comment can be made at this time about the outcome of the exercise but the company remains confident in its ability to effect a successful process”, a Vedanta Resources spokesperson said.

Vedanta Bondholders Set High Payout Bar, Want Promoter to Contribute Capital, too

Vedanta Resources is the London-listed holding company of the Mumbai-based conglomerate Vedanta Ltd, which is in the process of value unlocking through separate listing of its different revenue streams. Investors have asked for capital contribution of $100 million from the promoter Anil Agarwal. Also, they have asked Vedanta to raise at least $750 million from Standard Chartered Bank and JP Morgan to generate cash for the upfront payment. They have asked the company to extend the maturity of the intercompany loan from Cairn India Holdings from December 2024 to December 2027.

The group of bondholders also proposed that the maturity date for two secured bonds be set to no later than January 2026. Also, they have demanded quarterly amortization in equal installments, beginning from the first full quarter after the liability management effective date.

Investors have demanded that after the effective date, a 14.875% per annum coupon will be payable semi-annually in cash, with a quarterly step-up of 1% in cash.

VRL is facing $1 billion bond maturity in January, and around $1 billion in August and another $1.2 billion in March 2025.

Since this ad hoc group represents secured bondholders, they have demanded that there should be no upfront redemption for unsecured bonds of 2024 and 2026 notes. Also, the group demanded that the maturity date of the 2024 unsecured notes be extended to December 2027, with the condition that no cash redemption is permitted while the secured bonds are outstanding.

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