Vedanta Demerger Receives Nod From Key Creditors, Including SBI
The demerger will create independent companies housing the aluminium, oil & gas, power, steel and ferrous materials, and base metals businesses.
Vedanta Ltd. has received approval from a majority of its creditors to demerge its businesses, marking an important step in the company’s plan to split into six independent listed companies.
A senior executive at the mining conglomerate recently said they received approval. Most of the lenders gave their assent during a recent meet with bondholders, the Press Trust of India reported.
The demerger will create independent companies housing the aluminium, oil & gas, power, steel and ferrous materials, and base metals businesses, while the existing zinc and new incubated businesses will remain under Vedanta.
According to the executive, certain individuals are awaiting the committee meeting, while others are awaiting the board meeting. Currently, they have obtained 52% of the required balance, which will be fulfilled within a week or 10 days, and subsequently, they will submit the application to the NCLT, he said.
The State Bank of India, a major creditor, had previously given its approval, according to a banker in the know. This was considered the final significant compliance needed for the company, and clears the path for the $20 billion demerger.
The move comes at a time when Vedanta has made progress in its deleveraging. As of March 31, the company's net debt was Rs 56,388 crore, a reduction of Rs 6,155 crore from December 2023. This was driven by strong cash flows from operations and working capital release.
The corporation and its bonds have received higher credit ratings from rating agencies. Vedanta's Rs 2,500-crore commercial paper got an 'A1+' rating from ICRA on May 30. ICRA provided the firm with a long-term rating of 'AA-' and a short-term rating of 'A1+' in May. Likewise, Crisil and India Ratings have given Vedanta long-term ratings of 'AA-' and 'A+', and short-term ratings of 'A1+' and 'A1', respectively.
Vedanta’s lenders include state-run banks, including SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Indian Overseas Bank, Union Bank of India and Bank of Maharashtra. Private lenders such as Yes Bank Ltd., ICICI Bank Ltd., Axis Bank, IDFC First Bank and Kotak Mahindra Bank are also part of its consortium.
(With inputs from PTI)
