Vedanta Resources outlines terms for bond restructuring

Vedanta Resources bonds saw some selling by private banks and wealth clients after the restructuring announcement. The bond maturing in January fell 2-3 points to 90/91, said a trader. The management provided detailed insights into its proposed bond restructuring plan, following the recent announcement of a successful $1.25 billion financing.

The management was speaking to bondholders for consent solicitation exercise for restructuring a series of bonds, including those due in January 2024, August 2024, and March 2025.

As part of the restructuring, Vedanta outlined specific cash proceeds for each bond series and proposed amendments for the April 2026 bonds. The company plans to utilise the cash proceeds for the January 2024 bonds and to facilitate certain covenant amendments for the April 2026 bonds. The proposed changes also include provisions for a new private credit facility of $1.25 billion.

For the January 2024 bonds, bondholders are offered a 53% cash payment along with a 2% consent fee, maturing in January 2027. Vedanta has offered a 6% upfront payment on the August 2024 bonds, and a 16% upfront payment on the March 2025 bonds. Again, an early consent fee of 2% and a late consent fee of 0.25% of the outstanding principal are part of the terms.

The August 2024 and March 2025 bonds will be translated into three separate maturities, occurring in August 2027, August 2028, and December 2028, taking it to $894 million and $1 billion, respectively. Also, Vedanta plans to securitise brand royalties as well as part of a credit facility announcement on the VRL website.

The proposed restructuring is undertaken to enhance Vedanta’s financial flexibility and raise coupon rates to 13.875%. The company expects early bird voting deadlines on December 27, with final voting deadlines on January 4, 2024. Vedanta Resources has also added restrictions on payments from subsidiary Twin Star Holdings Ltd. until the company regains at least a B- rating, said Omar Davis head of strategy on a call to bondholders, said sources.While the company needs consents from all four series of bonds, it needs adequate support for the successful execution of this restructuring initiative. The consent solicitation exercise will need a 66.67% majority of the outstanding amount on each bond.

The remaining principal of the January 2024 bonds will be termed out to January 21, 2027. For the August 2024 and March 2025 bonds, the remaining portion will be termed out, with maturities split into three tranches each, due on August 9, 2027, August 9, 2028, and December 9, 2028.

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