Vedanta Raises $1 b via Bond Sale to Re­duce Debt Burden

Of­fers coupon rate of 6.125% for lat­est sale as part of plan to re­fi­nance $1.8b debt

The Economic Times - - Companies: Pursuit Of Profit - Vat­sala.Gaur@ times­group.com

Mum­bai: Me­tals mag­nate Anil Agar­wal’s Vedanta Re­sources on Friday announced that it has raised $1 bil­lion through a bond sale, the pro­ceeds of which would largely be used to re­fi­nance ex­pen­sive debt. On July 27, ET was the first to re­port the pro­posed sale and road-shows to drum up in­vestor sup­port for the is­sue.

The lat­est debt is­suance is part of Vedanta’s “com­pre­hen­sive re­fi­nanc­ing plan” of $1.8 bil­lion debt announced by the com­pany last week. Vedanta had said that it planned to raise the cash through a mix of bonds and term loans. The coupon rate for the lat­est sale is 6.125% and the bonds are due in 2024.

Vedanta in­tends to use the pro­ceeds to buy back its out­stand­ing loans of $774.8 mil­lion due in 2019, and $900 mil­lion due in 2021, and to “re­pay other in­debt­ed­ness”. It had ac­cepted to pur­chase $522.5 mil­lion of the 2019 bonds, and $229.8 mil­lion of the 2021 bonds.

“The trans­ac­tion is in line with our stated fi­nan­cial strat­egy to strengthen our bal­ance sheet. We have taken a num­ber of proac­tive mea­sures over the last year to ex­tend ma­tu­ri­ties, op­ti­mise our fund­ing struc­ture and as a re­sult have cre­ated value for all stake­hold­ers. We are pleased with the strong re­sponse th­ese bonds have re­ceived, dis­play­ing in­vestor con­fi­dence in Vedanta’s credit story,” Anil Agar­wal, chair­man, Vedanta Re­sources, said in a state­ment.

Apart from the bonds, the com­pany has also re­ceived com­mit­ments from global and In­dian banks for $840 mil­lion of term loans, with fi­nal ma­tu­rity of 5 years. Th­ese funds will also be used in the re­fi­nanc­ing.

ET re­ported on July 27 that bankers as­so­ci­ated with the bond-sale ex­er­cise were con­duct­ing in­vestor road-shows in North Amer­ica, Europe, Mid­dle East and Asia to gauge “mar­ket ap­petite” for the is­sue.

Vedanta’s gross debt stood at $18.2 bil­lion at the end of 2016, and the com­pany re­duced it fur­ther by $1.4 bil­lion af­ter March 31, 2017. Net debt stood at $8.5 bil­lion. The com­pany’s In­dian sub­sidiary Vedanta Lim­ited re­ported a net debt of .₹ 19,024 crore at the end of the April-June quar­ter. The current an­nounce­ment, clubbed with the $1-bil­lion bond sale that the com­pany un­der­took in Jan­uary, will ex­tend Vedanta’s debt ma­tu­rity level by 1.5 years and bring down the cost of bor­row­ing, re­sult­ing in no sig­nif­i­cant debt ma­tu­ri­ties till De­cem­ber, 2018.

Bar­clays, Credit Suisse, DBS, First Abu Dhabi, JP Mor­gan and Stan­dard Char­tered are act­ing as joint global co­or­di­na­tors for the ex­er­cise. Axis Bank, Bar­clays, Credit Suisse, DBS, First Abu Dhabi, ICICI Bank-IFSC Bank­ing Unit, JP Mor­gan and Stan­dard Char­tered are also act­ing as joint lead man­agers and joint book-run­ners. The new is­suance was over­sub­scribed 2.6 times at the ini­tial price guid­ance and was dis­trib­uted widely, with 50% fi­nal al­lo­ca­tion to Europe, 30% to Asia and 20% to US.

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