According to persons with knowledge of the situation, the billionaire Anil Agarwal-led Vedanta Resources plans to partially repay $3.2 billion in bonds that mature in 2024 and 2025 by signing a $1.2 billion loan agreement with a number of international private credit institutions next week.
According to the persons, Cerberus Capital Management, based in New York, is leading the investment round and will underwrite roughly $300 million. Other participants in the round include Davidson Kempner Capital Management, Varde Partners, and Ares SSG Capital Management.
In order to prevent a possible default, the group needs to complete the transaction. The loan, which has an annual percentage rate of up to 18 percent, will be secured by shares of Vedanta Resources and royalty receivables from group companies. The loan will have a two-year duration.
The $1 billion in 13.875 percent bonds due in January, the additional $1 billion in 6.125 percent notes due in August 2024, and the $1.2 billion in 8.95 percent bonds maturing in March 2025 are all due to the mining and metals conglomerate.
A representative for Davidson Kempner declined to comment, while emails to Varde Partners, Ares SSG, and Cerberus Capital went unanswered.
“Negotiations are at a final stage and an agreement is expected to be signed by next week,” a single individual stated. “Disbursement is expected to be done by January.”
By the end of December, the Vedanta Group intends to raise $1 billion in order to meet the January bond repayment deadline.
Ajay Goel, the chief financial officer of Vedanta, stated in November that the company was in talks with lenders to secure the nearly $1 billion it would require over the next six months. According to Goel, the team wanted to complete the financing by the end of December in order to fulfil the January bond repayment deadline.
Due to heightened funding risks, S&P Global Ratings updated Vedanta Resources’ credit outlook to negative in August. The company’s “B-” rating, which denotes a comparatively higher credit risk, was confirmed by the agency.
According to S&P, Vedanta’s refinancing risk has increased due to its diminished ability to obtain cash flow from its subsidiaries during difficult external financing conditions.
It stated, “The company has approximately $3 billion in debt that is due between now and August 2024.”
According to S&P, Vedanta Resources is moving forward with refinancing, but there are still execution risks.