Vedanta shares in focus on report parent faces resistance amid bond restructuring plan

Shares of Vedanta Ltd, whose shares have falling for three straight days, will be in focus on Monday amid a media reports that suggested that the London-based parent Vedanta Resources has seen some resistance from investors regarding its plan on bond restructuring, as they seek better terms. The proposed plan, as per the ET report, suggests making a 50 per cent upfront payment for the $1 billion January 2024 bond, in addition to a 15 per cent payment for the August 2024 bond, and a 10 per cent upfront payment for the March 2025 bonds. The remaining amounts, as per the plan, are to be restructured, the ET suggested.

However, Vedanta Resources requires the approval of at least two-thirds of the bondholders for this plan to proceed. The report suggested that the initial feedback from investors in Hong Kong and Singapore hints at discomfort with the proposed restructuring, raising the possibility of opposition from a group of bond investors, the ET report said quoting sources.  Vedanta shares fell 0.64 per cent on Friday, 2.29 per on Thursday and 1.99 per cent on Wednesday.

ET had last week suggested that Vedanta Resources was in advanced talks with private credit funds namely Davidson Kempner, Bain Capital, Ares SSG Capital and Cerberus Capital, to syndicate a $1 billion short-term loan. It cited two sources as suggesting the loans would be utilised for part-paying $3.2 billion of bonds that would be maturing in Calendars 2024 and 2025. 

Meanwhile,  India-listed Vedanta’s authorised committee of directors last week considered and approved for raising, on a private placement basis, up to 2,50,000 secured, unrated, unlisted, redeemable, non-convertible debentures of face value Rs 1,00,000 each aggregating up to Rs 2,500 crore in one or more tranches. This would a part of the company’s routine refinancing that is undertaken in ordinary course of business.

Antique Stock Broking has a target of Rs 329 on the stock. Kotak Institutional Equities, on the other hand, has a 'Sell' rating on the stock with a target of Rs 200. Kotak, in a recent note said since large dividends are no longer possible, parent Vedanta Resources might be looking to divest stake or assets in India-listed Vedanta. Kotak in a recent note felt that bleak commodity cycle suggests a downside risk to Vedanta's earnings.

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