Mining major Vedanta, a subsidiary of London-headquartered Vedanta Resources (VRL), has pledged another 2.44% stake of its subsidiary Hindustan Zinc (HZL) to raise Rs 1,500 crore. The latest pledging by the Anil Agarwal company, totalling 103.24 million shares, is as security for a term loan the firm raised.
With this, Vedanta has pledged 91.35% of its total 64.92% in HZL. The government holds a 29.54% stake in HZL, which was privatised more than two decades ago, and Vedanta holds a 64.92% stake.
The latest 2.44% pledge was in favour of Axis Trustee Services, while the majority or 56.87% was pledged with Union Bank of India. The company has raised the loan for general business purposes, including repayment of existing debt, capital expenditures and operating expenses, HZL said in a stock exchange update.
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Vedanta has entered into a term loan agreement under which one of the security covers include pledging shares of HZL.
On April 13, Vedanta’s board approved raising of up to Rs 2,100 crore through issuance of non-convertible debentures (NCDs) through private placements. The NCDs were to be raised in one or more tranches. The move came at a time when its parent VRL was seeking to shore up funds to trim debt.
Prior to this in March, Vedanta had approved its fifth interim dividend of Rs 20.50 per share or a total of Rs 7,621 crore for FY23. With this, the total outgo by way of dividends for FY23 was at about Rs 37,733 crore.
The government had recently opposed HZL’s proposed $2.98-billion acquisition of Vedanta’s zinc assets, with it flagging several concerns of this related-party transaction, including rationale and valuations.
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Earlier, in February, S&P Global Ratings said in a report that the liquidity of VRL (Vedanta’s parent) hinges on its fund-raising abilities and the next few weeks would be “crucial”. The company was “highly likely” to meet its obligations until September 2023, it said, adding, sustaining liquidity beyond that would depend on the completion of at least one of two key ongoing transactions. These include a targeted $2-billion fund-raising exercise, and the proposed sale of international zinc assets by Vedanta, in which Vedanta Resources has a 70% stake, to Hindustan Zinc (HZL).