New Delhi: Vedanta, a subsidiary of London-based Vedanta Resources (VRL), has pledged an additional 2.44% stake in its subsidiary Hindustan Zinc (HZL) to raise Rs 1,500 crore. The Anil Agarwal-led company has pledged a total of 103.24 million shares, equivalent to 91.35% of its 64.92% stake in HZL. The government holds a 29.54% stake in HZL, while Vedanta owns the remaining 64.92% stake. The latest pledging has been done as security for a term loan raised by the company.
The majority of the pledged shares, i.e., 56.87%, have been pledged with Union Bank of India, while Axis Trustee Services has received the remaining 2.44%. Vedanta has raised the loan for general business purposes, including capital expenditures, repayment of existing debt, and operating expenses, according to HZL’s stock exchange update. The company has entered into a term loan agreement, pledging HZL shares as security.
In April, Vedanta’s board approved raising up to Rs 2,100 crore by issuing non-convertible debentures (NCDs) through private placements. The NCDs were to be raised in one or more tranches. This move came at a time when its parent company VRL was seeking to raise funds to reduce debt.
Earlier in March, Vedanta approved its fifth interim dividend of Rs 20.50 per share, totalling Rs 7,621 crore for FY23. The total outgo by way of dividends for FY23 was about Rs 37,733 crore.
Recently, the Indian government opposed HZL’s proposed $2.98-billion acquisition of Vedanta’s zinc assets, citing several concerns, including valuations and rationale, in the related-party transaction.
In February, S&P Global Ratings stated in a report that VRL’s liquidity depended on its ability to raise funds, and the next few weeks would be crucial. The company was “highly likely” to meet its obligations until September 2023, but sustaining liquidity beyond that would depend on the completion of at least one of two key ongoing transactions. These include a targeted $2-billion fund-raising exercise and the proposed sale of Vedanta’s international zinc assets to HZL, in which Vedanta Resources has a 70% stake.
