Debt Issues: Vedanta raises Rs 2,500 crore through unlisted NCDs

Vedanta Ltd (VDL), the Indian subsidiary of the metals and mining conglomerate Vedanta Resources, on Friday raised ₹2,500 crore through unrated unlisted non-convertible debentures with a maturity period of 1 year and 6 months, offering an interest rate of 12%.

To support this bond issuance, VDL has pledged 100% of the total share capital of its subsidiary Sesa Iron and Steel.

VDL intends to utilise the proceeds from the bond issuance to meet its capital expenditure requirements or to repay these term loans.

The company faces two separate term loan repayments of ₹300 crore and ₹1,000 crore, due on November 14, 2023 and March 31, 2024, respectively, as previously reported on September 17 by ET.

On September 21, VDL received board approval to raise up to ₹2,500 crore through non-convertible debentures via a private placement.

VDL’s parent company, Vedanta Resources, is grappling with significant debt issues. On Friday, S&P Global Ratings downgraded Vedanta Resources to CCC, citing potential bond extensions, and placed the company on credit watch negative due to an increased likelihood of liability management exercises. S&P stated that VRL has limited alternative funding sources, despite a high likelihood of meeting the January 2024 bond payment and there remains a funding gap of $600 million.Vedanta Resources has initiated discussions with bondholders to address bonds maturing in 2024 and 2024, including $1 billion maturing in January.