Vedanta Resources undergoing 'comprehensive' $1.8bn refinancing

Vedanta Resources announced the pricing of an offering $1bn of 6.125% bonds due in 2024 on Thursday.

The FTSE 250 company said it intends to use the net proceeds primarily to fund its new offers to purchase for cash any and all of its outstanding $774.77m 6.00% bonds due 2019, and $900m 8.25% bonds due 2021, and to repay other existing indebtedness.

It said it has received and accepted for purchase $522.51m of the 2019 bonds and $229.84m of the 2021 bonds.

“This comprehensive refinancing plan announced earlier by the company is leverage neutral and is funded through a mix of bonds and term loans,” Vedanta’s board said.

“The company has received commitments from global and Indian banks for $840m of term loans with final maturity of five years.”

Upon the successful completion of the suite of transactions, Vedanta will proactively refinance part of its 2019 and 2021 bond maturities and is expected to have no significant bank loan repayments due over the next 18 months.

It said the transactions would extend the company's average debt maturity by 1.5 years and lower its average cost of borrowing.

The board claimed Vedanta received “strong” investor interest for both the bonds and the tenders.

It said the bond coupon of 6.125% for a seven-year maturity compared favourably to Vedanta's previous bond offering in January of 6.375% for a 5.5 year maturity.

“The transaction is in line with our stated financial strategy to strengthen our balance sheet, said chairman Anil Agarwal.

“We have taken a number of proactive measures over the last year to extend maturities, optimise our funding structure and as a result have created value for all stakeholders.

“We are pleased with the strong response these bonds have received displaying investor confidence in Vedanta's credit story.”

The bonds are being offered and sold in a private offering to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended, and outside the United States under Regulation S under the Securities Act.

Vedanta said the offering was expected to close on 9 August 2017, subject to customary closing conditions.