Anil Agarwal-led resources conglomerate Vedanta has encumbered a part of its stake in Hindustan Zinc (HZL) to raise Rs 1,500 crore in loans against those shares at more than 50% margin to their market value, Vedanta told the exchanges in a mandatory filing Thursday.
The shares, amounting to 2.44% of HZL’s total share capital, are worth about ₹3,300 crore, said the note to the exchanges. The encumbrance has been created in the favour of Axis Trustee Services, which is acting as the facility agent for the loan.
The capital borrowed will be used for “general business purposes, including repayment of existing debt, capital expenditures and operating expenses,” Vedanta said in the note to the stock exchanges.
Vedanta retreated 0.6% to ₹279.75 on the National Stock Exchange, while Hindustan Zinc climbed 0.8% to ₹327 apiece.
With this, 91.35% of the promoter stake in HZL has now been encumbered across four different encumbrance transactions, latest data showed. Meanwhile, the entire promoter holding in Vedanta has been encumbered.
Last week, Vedanta had announced it would raise ₹2,100 crore through a private placement of non-convertible debentures (NCD).
The multiple fundraises from the mining and resources major come at a time when its London-based parent Vedanta Resources (VRL) is scouting for capital to meet upcoming debt obligations. VRL has near-term maturities of around $1.7 billion (₹13,885 crore) in the first quarter of FY24, as per a recent report from Crisil Ratings.
Vedanta has given out a record ₹37,730 crore as dividends in FY23 to support its cash-strapped parent VRL, raising concerns in the analyst and credit rating communities. Financial industry watchers have cautioned that the leverage of Vedanta and Hindustan Zinc may go up in light of the high dividend outflows.
Last month, Crisil Ratings revised its outlook for Vedanta to ‘negative’ from ‘stable’, while reaffirming its rating of CRISIL AA on expectations of higher debt on the company’s books.
