The loan has a tenor of 15 months and all-in cost of 11.5% IRR split into a running coupon of 10.5% per annum, payable monthly, and a 0.5% upfront fee, showed the term sheet seen by ET.
The loan will have a first exclusive charge over the fixed assets of the Thoothukudi (Tuticorin) copper smelter in Tamil Nadu and an exclusive pledge over Hindustan Zinc shares, providing a 2.2x cover. The Supreme Court of India has recently allowed Vedanta to start maintenance work at Sterlite Copper facility in Thoothukudi, which is shut since 2018.
The loan will be used for business purposes including repayment of existing debt, capex, and general corporate purposes and to pay transaction related expenses. Rating agencies Crisil and Icra have assigned AA ratings to the issuer.
Vedanta and Barclays did not respond to ET’s requests for comments.
In addition to the loan, Vedanta Limited is in the process of raising ₹2,100 crore through rupee-denominated non-convertible debentures (NCD). Vedanta’s London-based holding company, Vedanta Resources, has been in discussions with credit funds and banks for raising funds. It is in talks with Farallon Capital Management for a loan of $1.5-2 billion.
Separately, it has been in talks with banks including Barclays and JP Morgan to raise $1 billion to meet upcoming debt maturities. Vedanta Resources has debt obligations amounting to $1.7 billion in the first quarter this fiscal year. These include $900 million of bond maturities. It also has $1 billion of bond maturity in January 2024. Analysts and credit rating agencies have cautioned that the financial leverage of Vedanta Limited and its non-ferrous metals subsidiary Hindustan Zinc may go up in light of the high dividend outflows last fiscal. Vedanta Limited had a net debt of Rs 41,857 crore at a standalone level and Rs 38,076 crore at a consolidated level, as of 31 December 2022.
Last month, Crisil Ratings revised its outlook for Vedanta Limited to ‘negative’ from ‘stable’. The rating action reflects the possibility of higher-than-expected financial leverage and lower financial flexibility, with reducing ratio of cash surplus to 1-year maturities for fiscals 2023 and 2024.
The agency noted that progress on the refinancing plans has been slower than expected and has resulted in increased dividend payout by Vedanta Limited and reduced cash & cash equivalents during the fiscal. Including the recent dividend announced by Hindustan Zinc, dividend payout by Vedanta for fiscal 2023 will be highest ever – exceeding ₹40,000 crore.
Meanwhile, dollar bonds of Vedanta Resources rose Friday. The $1-billion, 6.125% bond due 2024 rose 4 cents to 68.625 Friday, said a bond holder.
Shares of Mumbai-listed Vedanta have risen 2.59% in the last five trading sessions to ₹275.70 apiece on the BSE.
