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Vedanta Secures $125M Loan, Barred from Selling Hindustan Zinc Stake

Vedanta Limited has secured a $125 million external commercial borrowing facility arranged by JPMorgan Chase. The loan agreement strictly prohibits the company from diluting its stake in subsidiary Hindustan Zinc Limited, mandating it retain at least 50.1% direct ownership until full repayment. This comes as Vedanta already has nearly 92% of its current 60.71% stake in Hindustan Zinc pledged against existing loans. Separately, the death toll from a boiler explosion at a Vedanta power plant in Chhattisgarh has risen to 20.

Key Points: Vedanta $125M Loan: Hindustan Zinc Stake Sale Barred

  • $125M ECB deal with JPMorgan
  • Must keep 50.1% stake in HZL
  • 92% of current HZL stake already pledged
  • Shares up 29% YTD
  • Chhattisgarh plant blast toll rises to 20
2 min read

Vedanta Ltd to borrow $125 million; barred from diluting Hindustan Zinc Ltd. stake

Vedanta Ltd secures a $125M loan with strict conditions, including a ban on diluting its majority stake in Hindustan Zinc until repayment.

"Vedanta cannot create any security on, or sell, its 50.1 per cent stake in Hindustan Zinc until the borrowing is completely settled. - Company Filing"

Mumbai, April 17

Vedanta Limited on Friday said it has secured a $125 million external commercial borrowing deal, but the agreement comes with strict conditions, including a restriction on diluting its stake in subsidiary Hindustan Zinc Limited and a mandate to retain majority ownership until the loan is fully repaid.

The company signed a facility agreement on April 14 with JPMorgan Chase Bank N.A., acting through its GIFT City branch as the mandated lead arranger and bookrunner, while also serving as the original lender.

Axis Trustee Services Ltd. has been appointed as the agent for the deal, according to its stock exchange filing.

As part of the agreement, Vedanta will have to maintain at least 50.1 per cent direct ownership in its subsidiary Hindustan Zinc Limited, until the loan is fully repaid.

The company is also required to retain direct control over the subsidiary during this period.

The filing further stated that Vedanta cannot create any security on, or sell, its 50.1 per cent stake in Hindustan Zinc until the borrowing is completely settled.

Currently, the Anil Agarwal-led firm holds a 60.71 per cent stake in Hindustan Zinc, of which nearly 92 per cent is already pledged against existing loans.

On the market front, Vedanta shares were trading 0.3 per cent lower on the NSE, even as the benchmark Nifty rose by a similar margin.

However, the stock has delivered strong gains of about 29 per cent so far this year.

In last five days, the shares were trading 6.45 per cent higher. The gains pronounced on higher timeframe as the stock delivered around 13 per cent to its investors in last one month.

Meanwhile, the death toll from the boiler explosion at the Vedanta Power Plant in Singhitarai village in Chhattisgarh's Sakti district earlier this week, has risen to 20, with 15 workers still battling injuries in hospitals.

The tragic incident, which took place on April 14, at 2:33 p.m., has sent shockwaves through the industrial belt of Chhattisgarh.

- IANS

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Reader Comments

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Priya S
Good move by the lenders to put strict conditions. Vedanta cannot be allowed to sell off crown jewels like Hindustan Zinc to pay off debt. It protects minority shareholders to some extent. But my thoughts are with the families in Chhattisgarh. Safety audits need to be paramount.
R
Rohit P
The stock is up 29% YTD, so market is liking something! This ECB deal from GIFT City is positive - shows global banks still have faith in Vedanta's long-term story despite the debt. The HZL condition is a non-issue, they weren't going to sell below 51% anyway.
S
Sarah B
Reading this as an investor, the financial structuring is one thing. But the human cost mentioned at the end is devastating. 20 lives lost. Corporate responsibility isn't just about balance sheets. Hope there is a thorough investigation and genuine compensation for the affected families.
V
Vikram M
JPMorgan through GIFT City... good to see India's own international financial centre being used for such deals. Saves forex and develops our own infrastructure. The 50.1% lock-in is sensible. But the real question is: what is this new $125 million for? Debt repayment or capex? The filing should be clearer.
K
Karthik V
‍♂️ The article mixes a financial deal with an industrial accident, and rightly so. It shows the two faces of a large corp. One is about billions in deals, the other about basic worker safety. As a nation, we need to hold them accountable on both fronts. Profits cannot come at such a cost.

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