Vedanta Resources Ltd. faces a moment of reckoning this week as Indian billionaire Anil Agarwal’s miner seeks approval for a proposal that could help it buy more time to honor its debt liabilities.
Bondholders have until Jan. 2 to give an early consent on a plan to push out due dates on $3.2 billion in bond repayments, a move that prompted S&P Global Ratings in December to cut the company’s rating deeper into junk.
Vedanta needs a green light from at least two-thirds of the bondholders in each of the three securities to proceed with the plan. A holder meeting will be held on 4th January.
The bid to revise the terms of its dollar bonds marks the latest attempt by Agarwal’s group to bolster its balance sheet, having already sold a stake in its Mumbai-listed subsidiary and secured a $1.25 billion private loan.
The fact Vedanta borrowed money at 18% to refinance debt underscores concerns about its finances.
The miner is offering to pay $779 million by early February for notes due this year and 2025, and plans to extend the maturity on the remaining principal by as many as four years.
S&P cut Vedanta Resources’ rating to to CC from CCC, saying the move will likely result in a downgrade to selective default.
Still, it expects “good earnings and strong cash flows” at the group as commodity prices improve and its Indian units send back $400 million-$500 million in dividends each year.
The miner also extended consent deadline for all the three dollar bonds by a few days to accommodate feedback from bondholders who were facing operational challenges amid year-end holidays.
If Vedanta fails to get the required support, the focus will shift to the company’s ability to honor its $1 billion bond due Jan. 21.
