Vedanta Limited to use Rs 8,000-crore QIP to repay Oaktree Capital, Deutsche Bank, Union Bank debts
Mumbai: Vedanta Limited plans to use the proceeds from its Rs 8,000-crore Qualified Institutional Placement (QIP) offer to partially or fully repay its debt to Oaktree Capital, Deutsche Bank, and Union Bank of India, according to the offer documents filed by billionaire Anil Agarwal’s company, media reported.
The floor price for the QIP, which began on July 15, is set at Rs 461.26 per share.
The primary objective is to repay or prepay certain outstanding borrowings of the company and one of its subsidiaries, THL Zinc Ventures Ltd, either fully or partially, as stated in the prospectus filed by the oil and metals firm with the exchanges, reported Moneycontrol.
A small portion of the proceeds will be allocated for general corporate purposes.
As of June 25, the company owed Rs 17,470 crore to Oaktree, Deutsche Bank, and Union Bank of India. Of this debt, Oaktree’s exposure includes Rs 2,500 crore through debentures and a dollar-loan facility worth approximately Rs 7,470 crore, the report said.
Vedanta has to pay Rs 6,400 crore to Union Bank and Rs 1,100 crore to Deutsche Bank.
“The repayment/ prepayment of the borrowings by our Company and/or our Subsidiary, will help reduce our overall outstanding indebtedness, debt servicing costs, assist us in maintaining a favourable debt-equity ratio and enable better utilisation of our internal accruals for further investment in business growth and expansion,” Vedanta said in the offer document.
The repayment will help improve its debt-equity ratio and enable the company to raise further resources at competitive rates and additional funds capital to fund potential business development opportunities, the company said.
The QIP is part of Vedanta's strategy to reduce its standalone debt by $3 billion over the next three years.
As of March 31, Vedanta reported a reduction in net debt to Rs 56,338 crore, a decrease of Rs 6,155 crore from the previous quarter.
In June, Vedanta's subsidiary Finsider International accepted a proposal from one of its banks to sell a 2.6 percent stake, valued at Rs 4,379.7 crore, to a group of institutional investors.
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