Delisting of subsidiary to enhance Vedanta Resources’ financial flexibility: S&P

The proposed delisting of mining baron Anil Agarwal’s flagship Indian unit Vedanta Ltd will improve the group’s corporate structure and credit profile, S&P Global Ratings said on Thursday. This is despite a likely increase in Vedanta Resources’ leverage due to the transaction, it said in a note.

Agarwal-controlled Vedanta Resources is the parent firm of Mumbai-listed Vedanta, which houses mining and oil & gas operations of the group.

Vedanta Resources has proposed to buy out public shareholders in Vedanta Ltd.

“The proposed privatization is subject to several approvals, including by the Vedanta Ltd board of directors, which is scheduled to meet on May 18. We expect a tender offer only around June or July this year,” it said.

Vedanta Resources’ ability to refinance its near-term debt maturities, especially the USD 670 million bond maturing in June 2021, remains the key rating driver.

“A successful privatization of Vedanta Ltd should increase the parent’s refinancing options. We may upgrade Vedanta Resources if its liquidity position improves as a result. However, a lack of progress on the refinancing over the next couple of quarters could lead us to lower the rating,” the rating agency said.

“Vedanta Resources’ inefficient corporate structure and dependence on dividends from Vedanta Ltd for debt servicing have constrained its credit profile,” it added.

ET Energy World
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