Vedanta Promoters Can't Create Fresh Encumbrance On Pledged Shares, Says Trustee

Promoter Group of India-listed Vedanta Ltd. is not permitted to create fresh encumbrances on its shares after the holding companies pledged their entire stake in the resources company, according to the trustee.

The holdings were pledged with Madison Pacific Trust, and Axis Trustee Services was appointed as the Indian agent for this facility, according to a filing by parent Vedanta Resources Ltd. After the latest round of fundraising, the promoter group pledged its entire 63.71% stake as collateral against borrowing.

The terms comprise a commitment from Vedanta Holdings Mauritius II Ltd. not to dispose of its shares in Vedanta Ltd. VEDL shares, and prohibiting Twin Star Holdings Ltd. and Welter Trading Ltd. from creating liens on shares.

Axis Trustee Services, acting on behalf of Vedanta's lenders, confirmed the establishment of encumbrance by the promoter group.

This facility extends to both direct and indirect subsidiaries that are integral parts of the promoter group, such as Vedanta Resources Investments Ltd. and Vedanta Holdings Mauritius II.

Encumbering shares means putting them up as collateral for a loan or other financial obligation. Encumbered shares might have limitations on being sold or transferred without the lender's consent.