Vedanta shares tank 6% on reports of possible stake sale by Anil Agarwal

Vedanta Limited was trading 6 percent lower in the afternoon on March 23 following reports of chairman Anil Agarwal considering a minority stake sale in the company, a claim which the firm denied.

According to media reports, Agarwal was looking to sell less than 5 percent in the company to reduce the significant debt load of his commodities business empire. The move would be a last resort and only considered if other fundraising options failed, it added.

The company denied the claim, with a representative saying, “Any talks of stake sale in Vedanta Ltd is untrue and baseless.”

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Agarwal’s Vedanta Resources, which owns around 70 percent of Vedanta, has been in talks with at least three banks for a loan of as much as $1 billion, according to Bloomberg News.

Recently, rating agency Moody’s downgraded its negative rating on Vedanta Resources’ from CFR to CAA1, to reflect increasing refinancing risk surrounding holding company’s large debt maturities.

In Q3FY23, Vedanta Ltd’s net debt sequentially increased by Rs 60 billion due to sustaining capex and dividend payout, according to Systematix Institutional Equities.

“In 9MFY23, VEDL reduced debt at the holding company, Vedanta Resources Limited (VRL) by USD 1.7bn, in line with its commitment to reduce it by USD 4bn over three years,” the brokerage said.

Also Read: Anil Agarwal said to weigh Vedanta stake sale as last-resort option

“Cash requirement for maturing debt of USD 2.5bn at VRL for the next two quarters is completely covered via pass-through dividends from VEDL (USD 550mn), Oaktree capital upsizing (USD 750mn), PSU and foreign banks (USD 1.2bn), and the remaining amount through a combination of brand fees and any potential dividends in 1QFY24,” it added.

In an interview to the Financial Times on March 8, Agarwal said Vedanta group had ample funding options and aimed to become a “zero-debt company”, adding the company was in talks with JPMorgan and other banks for a $1billion loan for refinancing old loans.

Last week, Vedanta Resources repaid $250 million in loans to Barclays Bank and Standard Chartered Bank.

At 11.53 am, the scrip was trading 4 percent down at Rs 273.30, while benchmark Nifty was trading 0.048 percent higher at 17,160.05 points.

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