The shares of mining company Vedanta went up by almost 2% after Anil Agarwal’s company got a fee payment from its unit, Hindustan Zinc Limited. This payment helped the parent company pay off some of its debt.
Hindustan Zinc gave Vedanta a fee of 1.7% of its annual income, which was then given to the UK-based parent company Vedanta Resources Limited, the company’s management told bondholders this week during the yearly investor call.
At 11 a.m., the stock was selling at Rs 282.50, up 1.64 percent.
Vedanta Resources’ management informed bondholders that Vedanta paid a higher royalty fee of 3% in the first quarter, up from 2% the year before. Vedanta Resources used the royalty fee to help pay off bonds worth $500 million due on May 31 with a 7.125 percent interest rate.
CreditSights said that Vedanta Resources should be able to pay off its debts “successfully” in the next 12 months. But it is careful about the risk of refinancing the $4.2 billion in term debt that is due in FY24 and has warned about performance risks. If it can’t lock up funds for late FY24, that would be a downside risk.
Gross debt for Vedanta Resources was $6.8 billion as of April 2023. This was down from $7.8 billion at the end of March 2023 and $9.7 billion in March 2022.
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