Vedanta demerger gets approval from majority of creditors, including SBI: Official

New Delhi: Mining conglomerate Vedanta Limited has received approvals from the majority of its creditors for a proposed demerger of businesses, marking an important step in the company’s plan to split into six independent listed companies.

"I am happy to let all of you know that we have received the 52 per cent plus the additional percentage, which is required for us to reach 75 per cent. We have crossed that threshold as well. Most of the lenders have approved it," a senior Vedanta executive said in a recent bondholder conference call.

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The transcript of the call was reviewed by PTI.

"Some are pending for their committee meeting and some are pending for their board meeting. So, as we speak, we have already received 52 per cent. The balance requirement will be met in a week or 10 days' time. And thereafter, we will file the application with the NCLT," he added.

A major creditor - State Bank of India - had already granted its consent earlier, according to a banker aware of the development. This crucial approval is seen as the last major compliance requirement for the company, which was keenly watched by the market, and paves the way for the USD 20 billion demerger.

The green light by the majority of the creditors comes at a time when Vedanta has shown significant progress in deleveraging. As of March 31, the company's net debt reduced by Rs 6,155 crore from December 2023, reaching Rs 56,388 crore, primarily driven by strong cash flows from operations and working capital release.

Taking note, credit rating agencies have assigned stronger credit ratings to the company and its debt instruments.

Icra assigned an A1+ rating to Vedanta's Rs 2,500 crore commercial paper on May 30. It granted the company a long-term rating of ICRA AA- and a short-term rating of ICRA A1+ earlier in May. Similarly, Crisil and India Ratings have assigned long-term ratings of AA- and A+, and short-term ratings of A1+ and A1 on Vedanta, respectively.

Vedanta’s lenders include state-owned lenders like State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Indian Overseas Bank, Union Bank of India and Bank of Maharashtra. Private sector banks - Yes Bank, ICICI Bank, Axis Bank, IDFC First Bank, and Kotak Mahindra Bank are also part of Vedanta’s consortium of lenders.

The demerger will create independent companies housing the aluminium, oil & gas, power, steel and ferrous materials, and base metals businesses, while the existing zinc and new incubated businesses will remain under Vedanta Limited.

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