Hindustan Zinc raises ~3.5k-cr NCDS
Hindustan Zinc, a subsidiary of Vedanta, has raised ~3,520 crore through the issuance of non-convertible debentures (NCDS) which analysts feel could indirectly fund the delisting of Anil Agarwal-led metal and mining company.
“HZL being a listed entity cannot raise funds and use it for its parent. It is against regulations. Moreover, since the government has a stake in Hindustan Zinc, the company board will also have a government official, which will not allow such transactions,” a senior analyst with a ratings agency said.
Vedanta owns 64.9 percent stake in HZL, while the government has the residual stake of 29.54 per cent. “However, what HZL could do is route the funds via dividends to the promoter and separately raise from the market to enhance its cash and cash equivalent. That is a possibility,” the analyst said.
This will be first borrowing by the zinc producer in over a decade. HZL has historically been a debt-free firm. It generated free cash flows of around ~5,100 crore in FY20 net of nearly ~2600 crore worth of investment and capex.