Vedanta Resources secures $1.25 billion for debt refinancing amid S&P Global downgrade over heightened default concerns
Vedanta Resources Ltd (VRL), the parent company of the Vedanta group, disclosed that it has successfully obtained $1.25 billion from private credit lenders on Wednesday. The funds will be utilized for both debt refinancing and the establishment of a new credit facility, as per a report by moneycontrol.
The company has stated that the fundraising initiative is aimed at establishing a stable capital framework, showcasing its ongoing capacity to tap into global capital markets, and demonstrating investor trust in the core business. VRL has secured a loan from a collection of well-regarded financial institutions, primarily for the purpose of refinancing existing liabilities, as per the report. The identities of the lenders were not disclosed by the company.
Vedanta Resources Ltd. is actively seeking amendments to enhance the credit terms of its 2024-maturing bonds and will announce the results of the consent solicitation from existing lenders soon. The loan maturing in April 2026, guaranteed by VRL and subsidiaries, is collateralised by a negative pledge involving a 13.26 per cent stake in India-listed Vedanta Ltd and annual brand fees from subsidiaries.
Soon after the development, S&P Global Ratings downgraded Vedanta Resources' long-term issuer credit rating and long-term issue ratings on the company's bonds from 'CCC' to 'CC', as per a report by Reuters.
S&P Global attributed the decision to an increased probability of a traditional default in VRL's bonds. The rating agency also expressed apprehensions about substantial impending debt maturing around $4.5 billion by March 2025, along with limited access to internal cash flow and external financing.