Mumbai: Vedanta Resources (VRL) is looking to prepay a $550-million private credit facility (PCF) as early as next week and has initiated consent solicitation from investors. The company is in talks to raise $700 million from a group of banks, including Barclays, First Abu Dhabi Bank, Mashreq, Abu Dhabi Commercial Bank, Commercial Bank of Dubai, Standard Chartered, and Japan’s Sumitomo Mitsui Banking Corporation, to refinance this 18% coupon debt.
New borrowing is expected at a much lower rate of SOFR + 400-500 basis points. “The company has sought consent from investors to prepay the debt before the semi-annual coupon payment in October,” said a person familiar with the matter.
AgenciesIt needs approval from at least two-thirds of the PCF investors, which include Cerberus Capital, Davidson Kempner, Varde Partners, Broad Peak, BlackRock, SeaTown Holdings, and Aspex Management.
The PCF, raised in December 2023 and maturing in April 2026, is guaranteed by Twin Star Holdings and secured against brand fees from Vedanta (VEDL). Proceeds from the original $1.25 billion facility were used for liability management involving three offshore VRL bonds. Vedanta has been reducing its expensive facility, repaying $400 million through brand fee inflows and targeting a refinancing of the remaining $600 million. It has been working to bring short-term funding costs down to single digits, which will be a reduction of 800-900 basis points from the high-cost debt.
In FY25, VRL reduced debt by $700 million, while Indian arm, Vedanta, trimmed $500 million. The group’s net debt-to-Ebitda ratio improved to 2x from 2.7x a year ago. Over the last few quarters, VRL has refinanced its entire $3.1 billion bond book, extending average maturities beyond eight years and lowering coupon costs by 250 basis points.Earlier this month, Vedanta came under scrutiny after short-seller Viceroy Research accused the group of operating a “Ponzi scheme” calling it reliant on cash upstreaming from its Indian arm, which group has denied.
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