Anil Agarwal denies any intention to sell stake in Vedanta Ltd, says report baseless, untrue

Mining mogul Anil Agarwal has denied that he is planning to sell 5 per cent stake in Vedanta. On Thursday morning, a Bloomberg report said that Agarwal was analysing the sale of a minority stake in Mumbai-listed Vedanta Ltd. in a bid to reduce his business empire’s massive debt load.

Reacting to the news, Vedanta Ltd said on Thursday that talks of any stake sale in the mining major were "untrue and baseless", reported Reuters.

On Thursday morning, the Bloomberg report claimed that Agarwal is looking at divesting a less than 5 per cent stake in the Mumbai-listed company. A stake sale in Vedanta comes as a last option for the mining billionaire and will only be considered if other fundraising options fail, the report cited people familiar with the development told Bloomberg News.

Agarwal’s Vedanta Resources Ltd., which owns about 70 per cent of Vedanta, has been in talks with at least three banks for a loan of as much as $1 billion, Bloomberg News reported earlier this month. The discussions are ongoing and no final decisions have been made on the loan, the people said.

On Tuesday via an exchange filing, Anil Agarwal-led Hindustan Zinc announced its fourth interim dividend for FY23. The company said it will offer a dividend of Rs 26 per share, totalling Rs 10,986 crore. This is in addition to Rs 13 per share dividend the metals and mining company it announced in January, Rs 15.50 per share dividend it paid in November and Rs 21 interim dividend it went for in July last year. With this dividend, Hindustan Zinc has announced Rs 75.50 per share dividend in FY23 so far.

The key beneficiaries in this deal will be Agarwal’s Vedanta Ltd., which owns about 65 per cent of Hindustan Zinc, and the Centre, which holds around 30 per cent. London-based Vedanta Resources Ltd. is the ultimate holding company. The dividends announced would help Vedanta earn Rs 7,132 crore in dividend payout on 2,74,31,54,310 shares it held in the company as of December-end.

This extra amount would bring some respite to Agarwal, who has been planning different ways to clear his debt obligations after the Centre opposed its plans to sell the group’s international zinc operations to Hindustan Zinc Limited (HZL) for about $3 billion. Vedanta Resources has a net debt of $7.7 billion. HZL was privatised more than two decades ago.

Last week, London-based Vedanta Resources repaid $250 million in loans that the company took from Barclays Bank and Standard Chartered Bank.

According to S&P report, Vedanta Resources needs to service about $2 billion (Rs 16,510 crore) of debt between April and June this year. The rating agency added that Vedanta Resources' ability to meet its financial obligations beyond September would depend on the planned $2 billion fundraising as well as the proposed sale of Vedanta's zinc assets in Africa.

Vedanta Resources has upcoming bond repayments of $400 million in April, followed by another $500 million in May this year.

The rating agency has warned that if Vedanta Resources does not manage to raise new debt or conclude the sale of assets to Hindustan Zinc, its ratings would come under pressure.

"While Vedanta Resources will be able to meet its obligations from internal accruals, it could face a liquidity crunch if it fails to raise funds," S&P said in its note.

On Thursday, shares of Vedanta fell 6.34 per cent to hit a low of Rs 267.15. The scrip recovered a bit, but was still trading 4.4 per cent lower at Rs 272.80 around 11.15 am on Thursday.

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