Vedanta Ltd has reportedly sought approval from Reserve Bank of India (RBI) to give guarantees for a $1 billion loan that it plans to raise via one of Vedanta's foreign subsidiaries. Anil Agarwal-led Vedanta is in talks with JP Morgan, Barclays, Standard Chartered and Deutsche Bank for the said loan, Economic Times reported.
The loan is to be raised through THL Zinc Ventures, a wholly owned subsidiary of Vedanta Ltd that is based in Mauritius. The amount will then be upstreamed to the group’s London-based holding company Vedanta Resources Ltd (VRL) in the form of dividend payout, the report said, citing unnamed sources.
The global lenders in talks with Vedanta have supposedly sought 800 basis points over the secured overnight financing rate (SOFR). SOFR is the benchmark interest rate at which banks lend to each other in the global interbank market. The Anil Agarwal-led group has been negotiating for loan at a lower rate, the report added. The current SOFR is 4.55 per cent.
VRL is attempting to raise funds so that it can meet its upcoming debt obligations. VRL reportedly has $400 million of bonds due in April in addition to another $500 million dollar bonds due in May. Other than these immediate needs, Vedanta has another $1 billion bond maturing in January 2024.
Apart from its bond market requirements, VRL has $1.1 billion term debt, $600 million worth of interest payments and inter-company loans amounting to $450 million.
Earlier this week, it was reported that Vedanta chief Anil Agarwal was considering the sale of a minority stake to reduce his group’s debt load. Later on, however, Vedanta Ltd dismissed the reports and said in a statement, “Any talk of stake sale in Vedanta Ltd is untrue and baseless.”
