Vedanta Resources to deleverage debt by $3 billion over three years, plans to avoid rollover of loans
Vedanta Resources, the parent firm of Mumbai-based mining conglomerate Vedanta Limited, is planning to deleverage as much as $ 3 billion in debt over the next three years, a senior official said at an analyst meeting. The company is not looking for another rollover of its loans in the coming years.
“Deleveraging is our priority. We would be deleveraging the debt of Vedanta Resources by USD 3 billion over the next three years. Vedanta Ltd’s cash flow pre-growth capex is estimated to be USD 3.5-4 billion for the financial year 2025, sufficient for secured debt maturities of USD 1.5 billion,” news agency PTI quoted Navin Agarwal, Vice Chairman, Vedanta Ltd and member of Promoter Group as saying. He was speaking at a recently concluded analysts’ meeting.
‘No stake sale activity in the near term’
Clarifying that the company is not considering any stake sale activity in the near term, Navin Agarwal said that the parent company has multiple avenues to meet its debt obligation.
The company plans to manage the financial year 2025 maturities of USD 1,100 million and close to USD 750 million of interest servicing through brand fees, dividends from operating companies, asset monetisation and other strategic initiatives.
“The recent dilution was part of a broader strategy to achieve optimal capital allocation. We believe the upcoming commissioning of growth projects will significantly enhance earnings potential, leading to a natural reduction in the cost of capital,” he said.
The transaction has sparked considerable interest among market participants, especially among those who have been waiting for Vedanta’s forthcoming demerger announcement. There has been a heightened interest among market participants for foreign institutional investors (FIIs), domestic institutional investors (DIIs), and retail investors.
Finsider International divests 1.76% of its share in Vedanta
Setting the stage for strategic manoeuvring within the company, Vedanta divested a significant portion of its shares through its promoter entity Finsider International in February.
Finsider International sold 1.76 per cent of its shares at an average price of ₹265 per share, raising a substantial sum of ₹1,737 crore. As a result, the promoter group’s ownership stake has been reduced to 61.95 per cent.
The forthcoming demerger of the company is likely to simplify the Group’s corporate structure with sector-focused independent businesses. The demerger would ensure the development of asset ownership and an entrepreneurship mindset that would help each company chart out its growth trajectory.
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Published: 03 Mar 2024, 04:59 PM IST
Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.