THL Zinc Ventures, a subsidiary of the listed Vedanta Ltd. is in talks with banks including public sector lenders to raise up to $1 billion in loans with a minimum tenor of three years, two people in the know said.
They said the money would be borrowed at around 5% above the Secured Overnight Financing Rate (SOFR), a global rate gauge.
The loan will be backed by cash flows of Vedanta Ltd and Zinc International, which holds the group’s zinc assets in Africa and Ireland. The dollar loan will be written offshore by global banks and some public sector banks. The money raised will be lent to Vedanta Resources, the London-based holding company, as an intercompany loan, one of the people said.
“Zinc International had reported an Ebitda of $250 million and it should be easy for them to raise $750 million to $1 billion,” sources said. Barclays and Standard Chartered spokespeople declined to comment.
The company said that it was “fully confident” of meeting its upcoming debt maturities falling in the quarter ending June 2023 and was in an advanced stage to tie up required financing through around $1 billion of fresh loan from a syndicate of banks.
“We would like the investors to note that Vedanta group operating companies, underpinned by strong operating profitability from diversified and low-cost tier-1 assets are delivering healthy cash flows whilst maintaining disciplined capital allocation,” the statement read.Vedanta Resources has been exploring ways to raise funds to meet upcoming debt maturities, after Indian government’s nominees on group company Hindustan Zinc’s board objected to a $2.98 billion cash deal to purchase Vedanta’s zinc assets. Vedanta Resources has mandated Cantor Fitzgerald to syndicate a $2 billion loan to service short-term maturities, ET reported on February 16.
Vedanta Resources has a 70% stake in Vedanta Ltd, which owns 64.92% in Hindustan Zinc. In a letter to Hindustan Zinc, the ministry of mines had said the deal is a “related-party transaction” and the government would “like to reiterate” its dissent.
