Vedanta Resources seeking $500 million loan to fulfill repayment obligations
Vedanta Resources is in talks with Cerberus Capital Management and Varde Partners to obtain a $500 million loan. This will contribute to fulfilling a $1 billion repayment obligation due in January. The Economic Times reports that the firm is also discussing with Standard Chartered Bank and other credit funds for the remaining sum. The new loan is likely to have a much higher interest rate of around 17-18%, compared to prepayments from Oaktree and Trafigura, which were below 13%.
The loan will be used for the prepayment of bonds
The acquired funds would be used to prepay 55% of the 13.875% bonds due in 2024, 5% of the 6.125% bonds expiring in August 2024, and 20% of the 8.95% bonds maturing in March 2025. Initially, Vedanta proposed a loan amount of $1.2 billion, but private credit funds and lenders have reduced it to a $1.1 billion deal. Representatives for Varde, Cerberus, and Vedanta did not provide any comments to ET's inquiries.
Bondholders' intent regarding payments
Vedanta Resources is currently in talks with its bondholders about the final restructuring terms as part of a liability management exercise. Some bondholders have expressed their willingness to move forward with an upfront payment of $550 million by January 2024, along with an additional $100 million in consent fees, totaling 65% of the bond's overall value. The proposed loan is tipped to be secured by brand fee receivables, with bondholders seemingly split over the increased payments.
Details of restructuring and interest rates
The restructuring includes a 3% consent fee, which is approximately equal to $100 million. The restructured bonds are predicted to have a 14% interest rate and collateral ranging from 75% to 200%. Vedanta is offering upfront payments of 55% for the January 2024 bonds, and 5% and 20% for the August 2020 and March 2025 bonds, respectively.
