Vedanta's bond plan passes test, gets space to deleverage debt

Vedanta Resources, the London-based parent of India's Vedanta Ltd, has bought itself breathing room as it received investor consent on Wednesday to delay the maturity of a cumulative $3.2 billion of its outstanding corporate bonds.

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The company will meet the bond investors on Thursday, when it will discuss the restructuring plan in greater detail.

Vedanta Resources has been locked in a cycle of chasing capital every few months to refinance maturing debt. In the past one year, as liquidity in the global markets evaporated, the company found itself in a tight spot. It had nearly $2 billion of bonds maturing in 2024, including $1 billion this month, even as the flow of dividends from operational subsidiaries in India slowed down.

Now, with investors consenting to the company restructuring its outstanding commercial papers, Vedanta has no debt maturities till April 2026.

"This just eases off all the pressure on them," a senior banker said on condition of anonymity. "It basically gives them a glide path to do whatever they need to do in terms of the demerger or all the other activities that they want to do. They have more time to sell assets. They don't need to do any fire sales," the banker said.

A person aware of the company's plans said its deleveraging game plan will now involve paying lenders through cash flows and the sale of non-core assets.