Vedanta Resources secures $600 mn loan for refinancing high-cost pvt credit facility

London-based Vedanta Resources Limited (VRL), the father or mother agency of Mumbai-listed mining conglomerate Vedanta Ltd, has secured a time period mortgage facility of as much as USD 600 million that might be used to refinance a high-cost personal credit score facility, in line with a communication despatched to bondholders.

The primary tranche of USD 380 million has been dedicated, with the remaining USD 220 million anticipated to be finalised shortly with different taking part banks.

Lenders for the USD 380 million facility comprise a consortium of Gulf, Japanese, and European banks, together with First Abu Dhabi Financial institution, Mashreq, Sumitomo Mitsui Banking Corp, and Normal Chartered.

“The power carries a door-to-door tenor of over 4 years, with a median maturity of roughly three years and a pricing of SOFR (Secured In a single day Financing Fee) plus 450 foundation factors.

“This proactive refinancing, mixed with inner money flows, positions us to completely repay the PCF facility – considerably enhancing our credit score profile by growing common debt maturity past 4 years and lowering our total value of debt to single digits,” mentioned the communication to bondholders.

With financial savings of over 900 foundation factors within the curiosity prices for the USD 550 million refinancing, it will end in whole annual curiosity financial savings of round USD 50 million for the corporate. In its communication, VRL mentioned, “This transaction displays the continued confidence of worldwide monetary establishments in Vedanta’s credit score high quality and strategic imaginative and prescient. It underscores our dedication to prudent capital administration, proactive refinancing, strengthened monetary flexibility, and long-term worth creation.” VRL can be in search of a credit standing improve to BB ranges on the again of its proactive refinancing and bettering monetary and operational efficiency.

Within the medium time period, the corporate plans to realize an Funding Grade score supported by its sturdy earnings, wholesome free money flows, ongoing development initiatives, strengthened stability sheet and deleveraging plans.

An investment-grade credit standing signifies an organization’s sturdy capability to fulfill its monetary obligations and is taken into account a secure funding for institutional buyers. It additionally permits an organization to borrow cash at decrease rates of interest, attracting a broader vary of buyers and gaining simpler entry to world debt markets.

The refinancing is a part of VRL’s efforts to handle its debt profile because it seeks to optimise value and prolong maturities.

As of March, VRL’s debt hit a decadal low of USD 4.9 billion, as the corporate deleveraged its stability sheet by over USD 4 billion within the final three years.

The group continues to deal with deleveraging and bringing down its value of finance, stating in a latest earnings name that in FY25 its group-level debt decreased by USD 1.2 billion, of which USD 0.7 billion was at VRL and the remaining USD 0.5 billion was at its Indian listed subsidiary, Vedanta Restricted.

The Indian conglomerate mentioned in its latest earnings name that the corporate and its father or mother entity “now keep a stronger leverage place (web debt to EBITDA ratio) than most of their key world friends”.

Over the previous few quarters, VRL has refinanced its total USD 3.1 billion bonds, which has helped the corporate flatten its maturity curve and prolong the maturity to greater than eight years, lowering VRL’s money requirement and common coupon price by 250 bps.