Vedanta’s post-split debt worries banks
Lender worry over debt ratings: SBI Caps
studying impact
MUMBAI: Lenders to Vedanta Ltd are
concerned about the lack of clarity on how their debt will split among the
various business units following the mining behemoth’s proposed demerger, said
two bankers aware of the discussions. The lenders consortium, whose clearance
is required for the merger to go through, is yet to schedule a meeting to
decide on the matter.
The bankers, who are
part of the consortium, said the lead lender State Bank of India (SBI) has
informed them that its subsidiary SBI Capital Markets (SBI Caps) is looking at
the demerger to go through, is yet to schedule a meeting to decide on the
matter.
The bankers who are a
part of the consortium, said the lead lender State Bank Of India (SBI) has
informed them that its subsidiary SBI Capital Markets (SBI Caps) is looking at
the demerger proposal floated six months ago”, “Bankers have appointed SBI Caps
to look at issues like division of debt, and they started work on this a few
days ago. This was done so that an external expert can closely look at the
demerger proposal and see how it will impact lenders,” one of the two bankers
said on the condition of anonymity.
The lenders will meet
once SBI Caps assess the plan. In September, billionaire Anil Agarwal-led
Vedanta Ltd said it wanted to split the company into six separate listed
companies housing businesses such as aluminium, power, and base metals. It is
expected to be completed in the coming financial year.
According to the second
banker, the loans were given to Vedanta Ltd and they have a certain rating, “which
would change depending on which new
entity our loans reside in after the demerger. We do not service our loans
after the split, and that will be one of the sore, points whenever a meeting of
the creditors is held.
According to the second
banker, if he resultant debt after the split is in company housing a business
that did not perform well in the past quarters, lenders would be displeased.
Meanwhile, senior executives from Vedanta discuss the proposed split concerns
regarding the proposal, the second banker said.
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