Vedanta parent pledges 4.4% to rival Glencore for $250 mn

London-headquartered Vedanta Resources (VRL) has pledged 4.4% of its overall holding in its subsidiary Vedanta to its rival Glencore International in lieu of a $250-million loan under an agreement signed on May 25.VRL is required to procure certain actions on behalf of its subsidiaries Westglobe, Richter Holding and Finsider International Company (FICL) as third-party obligors, Vedanta said in a stock exchange update. VRL, Westglobe, Richter Holding and FICL are members of the promoter group of Indian mining major Vedanta.

Post the loan agreement, certain restrictions on disposing of shares (by selling, transferring or otherwise) have been placed on Westglobe, Richter on FICL in Vedanta. Additionally, a non-disposal undertaking (NDU) was executed on May 25 among FICL, Glencore and Catalyst Trusteeship (an onshore NDU agent) on the 4.4% shares, it said.

The move comes at a time when VRL is seeking to shore up funds to trim debt. VRL’s stake in Vedanta stands at 68.11% as of May 29. Indian unit holds a 64.92% stake in Hindustan Zinc, which was privatised over two decades ago, while the Indian government holds 29.54%.In May, VRL repaid loans worth $800 million to Standard Chartered Bank, following which encumbrance on all shares were released.

The debt was raised by group companies Twin Star Holdings, Vedanta Netherlands Investments BV and Vedanta Resources, while VRL and its subsidiaries were guarantors for the loans. The company has repaid three facilities, which were taken from Standard Chartered Bank, London and Hong Kong, VRL said.In April, VRL has reduced its gross debt by another $1 billion by paying all its maturing loans and bonds that were due in April. Following the initiative, the Anil Agarwal-controlled company’s gross debt has fallen to $6.8 billion in April from $7.8 billion as of March-end. The debt is lower by $2.9 billion from $9.7 billion recorded as of March-end 2022, VRL had said in a statement.

VRL has annual debt maturities of about $3 billion each in fiscals 2024 and 2025, with high near-term maturities of $1.7 billion in the first quarter of FY24. The company was in discussion with lenders for refinancing upcoming maturities of first quarter of FY24 and the same is expected to be completed by end of March 2023 or early April 2023, Crisil Ratings had said in March.