Vedanta in discussions with top banks for loans up to $600 million

BusinessVedanta in discussions with top banks for loans up to $600 million

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Anil Agarwal-led Vedanta Resources’ Ltd (VRL) is reportedly in discussions with Deutsche Bank and other world-famous lenders, which includes Barclays and JPMorgan. The talks are still in the early stages, and it is not yet clear whether Vedanta will be able to secure the loan.

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The company is wanting to raise almost a $500-600 million loan but it is getting delayed to get securing funds from Farallon Capital Management a credit fund, to secure a $1 billion loan. The move comes as Vedanta is facing increasing pressure to repay its debt and thus, is now looking to other lenders to raise the money.

The company has to meet certain obligations of repaying almost $500 million by May 2023 end. Thus, it is planning to borrow a loan from its Zinc International unit. As the loan from Farallon is getting delayed, the company aims to get small amounts of loans from other important global banks. As such a bank loan is quite affordable compared to the interest rate that has been charged by a credit fund company.

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The talks with Deutsche and other banks show that Vedanta is struggling to raise the money it needs to meet its debt obligations. The company has been hit hard by the decline in commodity prices, and it has also been criticized for its environmental record.

The lenders usually charge Secured Overnight Financing Rate (SOFR) + 800 basis points. Right now, the SOFR is at 5.06 percent. Vedanta was in talks with global banks to secure $1 billion. However, the company thought to lower the amount due to the increasing interest rates. 

Also, the lenders have mentioned the requirement for a guarantee from the company for a larger loan. So, Vedanta got approval from the RBI – Reserve Bank of India.

Also, the company seems to be reportedly in talks with banks and credit funds to again finance its June 2023 quarter debt requirements of $1.8 billion. Just last month, the company got approximately $600 million as a dividend from Hindustan Zinc. 

The company also announced the appointment of Sonal Shrivastava as the new Chief Financial Officer – CFO this week. She would be joining the company from 1 June 2023. 

Vedanta said in a recent filing to BSE that it plans to conduct a board meeting on 22nd May 2023, Monday in order to check and get approval for its first interim dividend on equity shares if any for the present financial year 2023-24. 

The company recorded a 68 % decline in fiscal fourth-quarter net profit in its oil and gas business, according to a regulatory filing.

Vedanta Resources Ltd., the Indian mining and metals conglomerate is one of the largest employers in India, and it is also a major contributor to the country’s tax revenue.

The future of Vedanta is uncertain, but the company’s financial problems are a major concern for the Indian government. If Vedanta is unable to raise the money it needs, it could face bankruptcy. The collapse of Vedanta would be a major blow to the Indian economy. 

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