The parent company of the Mumbai-listed company Vedanta, Vedanta Resources (VRL) in the UK, has started talks with Cerberus Capital Management and Varde Partners for a $500 million loan that will help fulfil a $1 billion payback obligation in January, according to a report by Economic Times.
In addition to these two private credit funds, VRL is in discussions for the remaining $500 million to $600 million with Standard Chartered Bank and other credit funds.
The loan will probably bear interest in the high teens and have a term of fewer than three years.
"The new loan is expected to be raised at a significantly higher interest rate, around 17–18 per cent, compared with prepayments from Oaktree and Trafigura, which were below 13 per cent," a source told ET.
"This new financing would be utilised for the prepayment of 55 per cent of the 13.875 per cent bonds due in 2024, 5 per cent of the 6.125 per cent bonds maturing in August 2024, and 20 per cent of the 8.95 per cent bonds set to mature in March 2025," ET further quoted the source as saying.
With $1 billion and $1.1 billion secured against the trademark fee receivables over the following three years, the possible financing package would be smaller.
VRL has been receiving management and brand fees from India-listed Vedanta. The local business increased these costs from 2 per cent to 3 per cent of revenue in April 2023, giving VRL around $410 million in upfront fees for FY24.
Vedanta has offered upfront payments of 55 per cent for January 2024 bonds, 5 per cent for August 2020 bonds, and 20 per cent for March 2025 bonds.