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Vedanta shares in news on report Anil Agarwal firm plans demerger of operations

Vedanta shares in news on report Anil Agarwal firm plans demerger of operations

Vedanta: The report quoting sources said Vedanta has informed its lenders about the restructuring and could announce the plans in the coming days, adding that iron ore, oil and gas, steel and aluminium businesses will be separately listed.

Amit Mudgill
Amit Mudgill
  • Updated Oct 4, 2023 8:02 PM IST
Vedanta shares in news on report Anil Agarwal firm plans demerger of operations Vedanta shares are down nearly 12 per cent in the six-day fall. Moody's has cut the credit rating for parent Vedanta Resources, citing not-so-meaningful progress on refinancing of debt.

Shares of Vedanta Ltd, which have fallen for six straight trading sessions,  would again be in focus on Thursday morning after a Bloomberg report suggested that the Anil Agrawal unit was nearing a deal to demerge businesses into several listed entities. As per the report, the broad restructuring, if successful, may help Agarwal manage his group's debt load.

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The report quoting sources said Vedanta has informed its lenders about the restructuring and could announce the plans in the coming days, adding that businesses such as iron ore  oil and gas, steel and aluminium will be separately listed.

The report came a day after Vedanta shares plunged 6.74 per cent on Wednesday, as Moody's cut its credit rating for parent Vedanta Resources, citing not-so-meaningful progress on refinancing of upcoming debt maturities of $1 billion bonds maturing each in January and August next year.

The holdco company had to sell a 4.3 per cent stake in India-listed Vedanta for around $500 million recently to stave off some of the pressure, Moody's noted this week.

Deven Choksey, Managing Director of KRChoksey Shares and Securities said Vedanta Resources has already pledged its entire share holding in Vedanta and their share of 64 per cent in Hindustan Zinc and, therefore, has limited ability to demerge other units given the charge of creditors on cash generating assets, particularly of Hindustan Zinc. 

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"Vedanta Resources is in catch 22 situation with mismatch on repayment of debt ( total $ 5.6 billion in following 2 years ). In my view they should be bringing in equity investor in the group as against debt swapping being done all this while. It will also help them win over the confidence of market on VDL. When debt swapping is done by bringing equity investor, it would also mean that the group will build it huge for future opportunities in commodities business. Having said, it would be a mistake to not tap equity investor at this stage also since there is significantly large appetite for india investment by global investors," Choksey said.

Vedanta shares are down nearly 12 per cent in the six-day fall. As per the Bloomberg report, Vedanta Resources would remain the holding company.  Deliberations are ongoing, it said adding that no final decisions have been made on the structure or timing of the de-merger.

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Resolving a byzantine corporate construct, as per the report, has been a priority for years for Agarwal’s indebted Vedanta Resources, but a global increase in borrowing costs has raised the stakes, it said.

Moody's had earlier noted that Vedanta Resources' credit quality was constrained by weak liquidity, thanks to large refinancing needs and interest expenses. Moody's said as Vedanta Resources’ entire shareholding in Vedanta and that Vedanta's entire 64.9 per cent shareholding in Hindustan Zinc, which holds around two-thirds of the group's consolidated cash, have already been pledged, Vedanta Resources has limited financial flexibility to raise financing.

 

Also read: Bank Holiday in these states due to Eid-E-Milad, Yatra Online shares listing in Top News on September 28: Share markets, Bank Nifty outlook, BMW iX1 electric SUV India launch

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Sep 28, 2023 8:04 AM IST
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