Vedanta Banks On Brand Monetisation And Refinancing To Repay Massive Debt

Vedanta Resources is eyeing brand monetisation, refinancing, and transfer of general reserves to meet its demanding debt repayment deadlines.

What Happened? The UK-based parent of Vedanta Ltd has already paid $2 billion (₹14,080 crore) of its $4.2 billion (₹34,400 crore) total debt repayment due in FY24, including principal requirements and interest or inter-company loans, the Economic Times reported, citing sources.

To address the repayment needs, Vedanta Limited increased the royalty percentage from its India-listed entity from 2% to 3%. The firm also told investors earlier this month that it had entered a royalty agreement with Hindustan Zinc at 1.7%.

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The Anil Agarwal-led firm has received a total brand fee of $413 million (₹3,400 crore) for FY24, which made up around 3% of Vedanta Limited’s top line, excluding Hindustan Zinc.

Vedanta Group had reportedly reached a deal last month to borrow $850 million (₹7,040 crore) under a five-year loan agreement with investment firms JPMorgan Chase & Co. and Oaktree.

Vedanta Resources also aims to refinance the entire Oaktree bucket, which refers to the $1 billion (₹8,200 crore) borrowed from Oaktree Capital Management against a 17% stake in Vedanta Limited held by its subsidiaries, sources told the business publication.

Out of the remaining $350 million (₹2,900 crore) owed to Oaktree, $100 million (₹819 crore) is due in October, with the remaining $250 million (₹2,050 crore) due in April 2024.

The conglomerate has been hard-pressed for cash after its sale of a zinc-mining unit to subsidiary Hindustan Zinc did not go through.

In addition to exploring refinancing opportunities and leveraging brand fees, Vedanta Resources could also consider pooling in dividends from its subsidiaries to meet its repayment requirements.

Hindustan Zinc and Vedanta Ltd are in discussions with lenders to transfer general reserves to retained earnings, creating additional dividend capacity, the sources added.

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