 "Vedanta")
Vedanta Resources will likely have enough liquidity until December 2023, said Standard and Poor’s (S&P) on Monday about a group that is securing about $1 billion funding at one of its operating companies.
The Indian natural resources group has debt servicing obligations of about $3 billion, including interest and inter-company loans. It will have at least another $1 billion obligations that require funding until March 2024.
S&P’s B-/Stable rating on Vedanta Resources reflects expectation that it will secure additional funds to support liquidity beyond December 2023. Vedanta Resources is in talks with banks and investors for at least another $2 billion in funding.
Successful closure of some of these discussions will facilitate the payment of its $1 billion bond due January 2024. Failure to demonstrate a credible refinancing plan at least six months before the bond maturity could lead to downside rating pressure. “We also believe Vedanta Resources will not undertake any transaction that we would regard as distressed”, S&P said.
Vedanta Resources' funding initiatives are supported by its capacity to borrow at its subsidiary, Twin Star Holdings. Twin Star directly owns a 46 per cent stake in the operating company, Vedanta Ltd. Vedanta Resources has been more successful in the past in raising debt at the Twin Star level, given the structural seniority of Twin Star debt to Vedanta Resources debt.
Twin Star has the estimated capacity to raise about $500 million under its debt covenants. Vedanta Resources' $1 billion bond maturing in January is also part of the debt at Twin Star. Vedanta Resources' $400 million bank loan maturing during the year are also part of the debt at intermediate holding companies, Twin Star, and Vedanta Netherlands Investments B.V.
While the recent fund-raising is credit-positive, Vedanta Resources will become more dependent on external funding. This is due to declining cash at the company's operating subsidiaries, said the rating agency.
