Billionaire Anil Agarwal’s Vedanta Resources plans to raise up to $1 billion selling bonds to global investors. The UK-based company is seeking to refinance existing debt, a move that is expected to reduce its funding costs, said three people familiar with the matter.
Those international debt securities may have three-year and five-year maturities.
One of the company’s existing debt is set for repayment in June 2022 for about $1.2 billion for Vedanta.
“The proceeds will primarily be used for that (repayment),” one of the persons cited above, told ET.
Barclays, Deutsche Bank, Citi Bank, Standard Chartered Bank are among others helping Vedanta NSE -2.40 % raise funds. The proposed deal is likely to be launched within a week or two.
Vedanta did not respond to ET’s request for comment. Individual banks could not be contacted for comments.
The bonds would be marked as high-yield papers, below the investment-grade rating ranks.
The US Treasury benchmark, a key global rate gauge, has started rising after US Federal Reserve minutes hinted at a quicker rate hike, as early as March, following an easy liquidity unwinding process.
It rose about 20 basis points to 1.74 since the beginning of this calendar year. Its near-term high was at 3.23 per cent on October 1, 2018. With the global economy gradually recovering, interest rates will likely go up across the board.
“Companies like Vedanta intend to tap the lower cost of borrowing amid this,” said a senior executive involved in the fundraising.
Sources said the company might retain subscriptions of anything between $600 million and $1 billion depending on investor response.
The funds are likely to help the company with future investments in its subsidiary, Vedanta Ltd. In October 2020, Vedanta Resources had failed to gather the required number of shares to delist Vedanta at the offer price of Rs 87.5 apiece.
After the failed delisting, Vedanta Resources and its associates sweetened its open offer price to buy shares in its Indian firm, Vedanta, by increasing its offer by 46.8 per cent to Rs 235 per share, as against its previous offer price of Rs160 a share. In addition to the hike in the offer price, the promoters also offered to buy 65.10 crore shares, against 37.17 crores earlier.
In September, Vedanta delisted its American Depositary Shares (ADS) from the New York Stock Exchange to terminate its ADS program that represents 4 per cent of the equity at the resources conglomerate’s Indian listed subsidiary.
In an unrelated development, its Indian subsidiary – Vedanta’s board of directors has decided to undertake a comprehensive review of the corporate structure of its Indian listed entity by evaluating a range of options and alternatives, including demerger, spin-off, strategic partnerships for unlocking value and simplifying corporate structure, the company said in November last year.
Source : Economic Times
