Vedanta Shares Drop Ahead Of Board Meeting, Firm Looking To Raise $1 Billion, Says Report

The Anil Agarwal-led company's board is set to meet on Thursday to discuss a "proposal for issuance of Non-Convertible Debentures on a private placement basis" as part of its routine refinancing. 

Shares of mining major Vedanta Ltd slipped around 3 per cent on Thursday intraday trade after reports said that its London-based parent Vedanta Resources is in talks to raise a $1 billion in short-term loan. The Anil Agarwal-led company's board is set to meet on Thursday to discuss a "proposal for issuance of Non-Convertible Debentures on a private placement basis" as part of its routine refinancing. 

At 11.50 AM, the stocks were trading at Rs 228.80 on BSE, down 3 per cent from the last day's closing. According to a Moneycontrol report, the company's shares have fallen over 25 per cent this year so far amid concerns regarding its debt has grown. 

On Thursday, the Economic Times reported that Vedanta Resources is in advanced discussions with global private credit funds like Bain Capital, Davidson Kempner, Ares SSG Capital, and Cerberus Capital to arrange a $1 billion short-term loan. The report citing two sources said that the mining-to-metals conglomerate plans to utilise the proceeds for partially redeeming $3.2 billion worth of bonds maturing in FY24 and FY25. 

Notably, the company has a $1 billion repayment obligation for 13.875 per cent bonds in January, another $1 billion for 6.125 per cent bonds maturing in August 2024, and $1.2 billion in 8.95 per cent bonds. Vedanta Resources faces concerns over high leverage and a $3 billion funding gap in FY25. While some one-time measures have been taken, such as a 6 per cent stake sale in Vedanta, addressing the FY24 gap, the $2.2 billion bond maturity in FY25 presents a significant financial challenge, as per reports. 

It has been reported that Vedanta Resources has been using dividends from its Indian unit and Hindustan Zinc. In FY23, Vedanta Ltd. paid a dividend of Rs 101.5, surpassing the proposed delisting price, as per the Moneycontrol reports. Analysts have suggested Vedanta may cut dividends and sell more subsidiary stakes/assets. The stock has a 'sell' rating, with reduced target prices, and limited optimism from other analysts, with only three out of 14 brokerages having a 'buy' rating.