Mumbai: Vedanta Resources Plc, the London-based mining and metals company of billionaire Anil Agarwal, has raised $1 billion by selling bonds to refinance its near-term debt obligations.
The new bonds were sold at a coupon of 6.375% and will mature in 2022, said two people aware of the development.
The company has used the proceeds to buy back through a tender offer part of two series of bonds maturing in 2018 and 2019. Vedanta bought back close to $800 million worth of these bonds.
The exercise will help the company reduce interest cost as well as replace near-term debt obligations with longer tenor paper. The 2018 and 2019 bonds carried annual coupon rates of 9.5% and 6%, respectively.
Mint was the first to report on Vedanta’s plans to raise up to $1 billion through bond issuances to refinance existing bonds due for maturity over the next three years. The company started the book running process for the new bonds on 16 January this year and commenced tender offers alongside to purchase for cash any and all of its outstanding bonds.
The company has redeemed $370.87 million of the 2018 bonds and $425.03 million of the 2019 series bonds, it said in a statement on Monday.
Following the cancellation of validly tendered bonds, the company said that $378.9 million of 2018 bonds and $774.77 million of 2019 bonds will remain outstanding.
Vedanta engaged Barclays Bank Plc, Citigroup Global Markets Ltd, JP Morgan Securities Plc and Standard Chartered Bank to serve as dealer managers for the tender offers. The deal attracted orders of more than $2.3 billion, with investors subscribing from the US, EMEA (Europe, Middle East and Africa) and Asia, a Reuters report said.
According to data from S&P Global Ratings, Vedanta has several debt repayment obligations. “The firm has bank loan maturities of $1 billion at the Vedanta Resources holding company due in FY18 and $500 million in FY19, in addition to bond maturities of about $2 billion in FY19, S&P said in a recent note.
Founded in 1986 by Agarwal, Vedanta Resources Plc was listed on the London Stock Exchange (LSE) in 2003. One of the largest mining and non- ferrous metals companies in India, Vedanta currently has mining operations in Australia and Zambia, and oil and gas operations in three countries.
In 2011, Vedanta Resources had acquired a 58.5 % stake in Cairn India Ltd for $8.67 billion. In June last year, Vedanta Ltd, a Vedanta Group company, announced the merger of Cairn India with itself in a $2.3 billion all-share deal. The firm had initially offered one ordinary share and 7.5% redeemable preference share of Vedanta Ltd with a face value of Rs10 but subsequently sweetened the deal by offering “each Cairn India minority shareholder one equity share in Vedanta Ltd and four Redeemable Preference Shares with a face value of Rs10 in Vedanta Ltd, with a coupon of 7.5% and tenor of 18 months from issuance”.
The offer was approved by shareholders of both Vedanta Ltd and Cairn India Ltd in September last year.