This week, Vedanta Resources Ltd. will have to make a decision as the miner owned by Indian billionaire Anil Agarwal requests approval for a plan that would give it additional time to pay down its debt.

On a proposal to defer the $3.2 billion in bond obligations until January 2, bondholders may grant early consent. S&P Global Ratings further downgraded the company’s junk rating in December as a result of this action.

Vedanta needs the consent of at least two-thirds of the bondholders in each of the three instruments in order to proceed with the strategy. There will be a meeting for holders on January 4.

After selling a part of its publicly traded subsidiary in Mumbai and obtaining a $1.25 billion private loan, Agarwal’s company is attempting once more to fortify its balance sheet by proposing to modify the terms of its dollar bonds. Vedanta’s choice to restructure debt at an 18% interest rate, however, calls into doubt the company’s soundness financially.

By early February, the miner is willing to pay $779 million for bonds due in this year and in 2025. The maturity of the remaining principal may be prolonged by a maximum of four years.

On notes due in April 2026, there will be no changes to the principal amount or the coupon. Permission to amend the fixed charge coverage ratio, a leverage covenant, is being sought by the miner.
Vedanta Resources was downgraded by S&P from CCC to CC, suggesting that a downgrade to chosen default is probably on the horizon. However, it expects “good earnings and strong cash flows” at the company despite higher commodity prices with its Indian units generating $400 million to $500 million in dividends yearly, which is a substantial source of finance for the parent company situated in the UK.

The proposal does not reflect the best terms for the notes, according to a group of adhoc holders of the company’s guaranteed notes, who claim the corporation neglected to include any feedback from them. In response, Vedanta stated that before to developing the proposal, it had discussions with numerous noteholders.

In order to take into account input from bondholders who were having operational difficulties during the year-end holidays, the miner additionally extended the consent deadline for all three of the dollar bonds by a few days.

Since the revised terms are more enticing, bondholders are advised to accept the modifications by research firm CreditSights. S&P Global, though, is dubious.

According to the ratings assessor, this is because Vedanta hasn’t offered sufficient compensation for the extension of maturities. According to S&P, the company is also giving cash flows and asset sales profits priority over other creditors in order to fulfill its commitments under the $1.25 billion credit facility.

The emphasis will move to Vedanta’s capacity to honor its $1 billion bond, which is due on January 21, if the business is unable to secure the necessary backing.

The firm’s obligation management exercise was best supported by the dollar notes due this month, with the remaining three trading below the 80 Cents on the dollar mark, which is typically regarded as a sign of distress.

According to data compiled by Bloomberg, the value of August 2024 increased by 3.5 cents on the dollar in December to 66.4 cents. The largest monthly gain since September is that amount. March 2025 notes saw an increase of 3.1 cents to 74.4 cents.

Raised in the Indian state of Bihar, Agarwal took over his father’s aluminum conductor manufacturing company in the 1970s before expanding into the scrap metal selling industry.

Through a string of audacious acquisitions, Agarwal established Vedanta Ltd. In 2001, he acquired a majority share in the government-owned Bharat Aluminium Co. and later Hindustan Zinc, another state-run company. He placed winning bids for Cairn India and iron ore producer Sesa Goa Ltd. in 2007. Additionally, Vedanta Resources owns operations in Africa for zinc and copper.