People familiar with the matter told ET that the approval is more than 97% for bonds maturing in 2024, 2025, and 2026. The company had to immediately repay $1 billion debt on January 21. It had offered an additional early consent fee for those agreeing to the restructuring, sweetening the proposal for investors.
Vedanta Resources received a strong approval from bondholders for the restructuring proposal of four series of bonds. The consensus ranged from 97% to nearly 100% across the four series. The company announced the outcome on the Singapore Exchange, where the bonds for the London-listed VRL are listed.
For the bonds maturing this month, with a total principal amount of $761 million, 97.78% voted in favour.
Similarly, for the bonds maturing in August 2024, of the $946 million, a total of 98.69% voted in favour.
For the 2025 Bonds, with a total principal amount of $1.14 billion, 99.66% voted in favour. Lastly, for the 2026 bonds, out of a total principal amount of $486 million, 99.12% voted in favour.
While the company needed consents from all four series of bonds and required a 66.67% majority of the outstanding amount on each bond for the restructuring to go through. The metals-to-oils conglomerate, which is owned through the London holding company, late September announced plans to demerge its Indian business units into independent ‘pure play’ companies to unlock value and get investments.
Deferred Maturities
Vedanta will now address the three bond maturities using a mix of cash and new bonds, where it will exchange about half of the January 2024 bond with new bonds maturing in January 2027, and most of the August 2024 and March 2025 bonds with new amortising bonds maturing in December 2028.
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 new notes will have a coupon of 13.875%. This results in a meaningful step-up in coupons for the August 2024 and March 2025 bonds, and, together with consent fee payments, represents an internal rate of return of about 15%-16% for the three bonds.
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.
Meetings for each bond series are scheduled Thursday, with further announcements expected regarding the passing of the Extraordinary Resolution and the execution of Amendment Documents and the Supplemental Trust Deed, according to the company’s announcement.
In the absence of the consent solicitation, the likelihood of a conventional default was high. The company has about $4.5 billion in debt maturities through March 2025.
S&P Ratings had downgraded Vedanta Resources to CC and called the Vedanta Resources’ liability management exercise involving three of its U.S. dollar-denominated bonds totaling $3.2 billion as a “distressed transaction”.
The rating agency has said that upon completion of the transaction, it could lower the long-term issuer credit rating on Vedanta Resources to ‘SD’ and the long-term issuer ratings on the company’s three bonds to ‘D’.