Key Points
Vedanta Ltd's plan to demerge its businesses could overshoot its timeline of 12-15 months given the likely lender scrutiny, experts said, pointing to the complexities associated with the proposed value-unlocking plan that involves listing the resources conglomerate's each revenue stream separately...
The company's distribution of debt across these new entities, in particular, will be in focus given that the split is expected to reduce the fungibility of cash flows across businesses...
"We...caution of execution risk for the demerger: we have heard that lenders are reportedly looking to scrutinize the demerger rationale, structural implications, long-term business goals post demerger, and financial management/funding for each unit," CreditSights said on Monday.. Vedanta will also need approvals from the National Company Law Tribunal (NCLT) and the Government of India, and the latter could be hard to come by given the impending federal elections next year, the financial research and credit analysis firm said in a note to its clients...
"This is becoming increasingly difficult, considering that cash flows from subsidiaries have contracted due to the weak commodity environment, HZL's cash balance is fully exhausted, and interest rates have increased amid downgrades by credit-rating agencies," PhillipCapital said.. (Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)..
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Vedanta's plan to demerge businesses may face hurdles from shareholders, creditors: Report
14, Mar, 24Vedanta's plan to demerge its businesses into separate entities may encounter challenges from its minority shareholders and creditors, according to a report by Credit Sights, a FitchSolutions Company. The mining conglomerate announced the demerger of five key businesses, including aluminium, oil and gas, and steel, on September 29.
Today’s challenges are the least I have faced: Anil Agarwal
06, Oct, 23The Vedanta group chairman says the company can rely on its cash flow and refinancing to repay its debt
Moody's downgrades Vedanta parent's CFR rating to Caa2 on elevated debt risk
26, Sep, 23The agency has also downgraded to Caa3 from earlier Caa2 its rating on the senior unsecured bonds issued by Vedanta Resources and those issued by its arm Vedanta Resources Finance II Plc, and guaranteed by VRL
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14, Dec, 23The move comes as Vedanta Resources recently secured $1.25 billion from financial institutions for refinancing, which includes a new credit facility.
A $2.5 billion debt bill shows risks ahead for Vedanta
31, May, 23Indian mining company Vedanta Resources, which is rated junk by credit agencies, faces a record annual bill of $2bn due in 2024 and another $500m bond payment on 31 May. While the May bond is trading close to par, pricing data on other bonds suggest concerns over repayment. Vedanta's reliance on dividend payments from profitable subsidiaries has caused cash reserves to dwindle to the lowest level in at least a year, while a drop in prices for its metals could also impact profitability. Vedanta has borrowed $250m to refinance debt and signed a five-year loan for around $850m with JPMorgan and Oaktree.