Vedanta Resources is reportedly in advanced talks with JP Morgan and Standard Chartered to secure $3 billion. According to a report by Livemint, the funds will help the company to avoid defaulting on its upcoming payments.
Vedanta Resources, which is the parent company of Vedanta Ltd, currently has $3.1 billion, which is due in the financial year 2024-25 (FY25). Significantly, in the financial year 2022-23 (FY23), the UK-based company received a substantial dividend of $2.5 billion from Hindustan Zinc Ltd and Vedanta Ltd.
According to reports, the company has diluted at least 6% stake in Vedanta Ltd over the past year to raise additional capital. Vedanta Resources debt, which amounted to $9.06 billion as of March 31, 2022, had decreased to $5.9 billion as of June 2023.
In the previous week, Vedanta made the announcement that its board had granted approval for a transition towards a pure-play, asset-owner business model, with the ultimate goal of establishing six distinct listed companies. The timeline for completing this restructuring is estimated to be within 12 to 15 months.
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Vedanta Resources, the parent company, has faced a string of credit rating downgrades stemming from apprehensions surrounding its substantial debt burden of $6.4 billion.
Under the new proposal, there are plans to establish five new publicly listed entities: Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, and Vedanta Base Metals, in addition to the existing Vedanta Ltd.
"We believe the demerger will unlock value and enable faster growth in each vertical," Anil Agarwal, Chairman at Vedanta, said in a statement.
According to Agarwal, Vedanta Ltd is on track to finalize the sale of its steel assets by the conclusion of this fiscal year. The company commenced a thorough assessment of its steel and steel raw material business, which was acquired through the acquisition of ESL Steel in 2018 for Rs 5,230 crore, back in June. The primary objective of this review is to divest from the steel sector and refocus on the company's core mining operations.