Vedanta Resources in talks with PE funds for $1 billion debt repayment

Vedanta Resources is currently engaged in advanced discussions with global private credit funds, including Cerberus Capital, Bain Capital, Ares SSG Capital, and Davidson Kempner, to syndicate a $1 billion short-term loan, according to a report by the Economics Times. This loan is intended to partially repay the company’s $3.2 billion bonds maturing in 2024 and 2025.

The company has $1 billion of 13.875 per cent bonds maturing in January, $1 billion of 6.125 per cent bonds due in August 2024, and $1.2 billion of 8.95 per cent bonds maturing in March 2025. To address these repayments, Vedanta Resources is simultaneously discussing with bondholders to modify repayment timelines and other terms on a portion of the $3.2 billion bonds.

Executives of the mining conglomerate proposed prepaying 30 per cent of the bonds upfront and rolling over the remaining 70 per cent over three years during roadshows in Hong Kong, Singapore, and London. During these roadshows, Vedanta also informed bondholders about its plans to raise funds by divesting its steel and mining assets. These discussions with potential buyers may take up to 15 months to conclude.

The company’s debt situation has raised concerns among rating agencies, with S&P Global Ratings warning of a possible downgrade of Vedanta Resources’ offshore bonds if adequate compensation for bondholders is not achieved. The conglomerate is facing significant debt maturities, with $1.3 billion due in the financial year 2024 and $4.3 billion in the financial year 2025, and it had $5.9 billion of debt, including $3.7 billion of bonds, as of June.

A spokesperson from Vedanta Resources informed ET that the company is continuously engaging in discussions with various parties, including existing bondholders, as it explores options to address its upcoming maturities and financial challenges.