Vedanta is set to sell its overseas zinc business to its Indian unit for $2.98 billion.


(Bloomberg) — Vedanta Wealth Ltd.’s dollar bond rises on improved liquidity prospects Vedanta Ltd. announced plans to sell its global zinc operations to a unit of Hindustan Zinc Ltd. for $2.98 billion and benefit from proceeds from Anil Agarwal’s cash cow. .

Most read from Bloomberg

All Vedanta Resources’ outstanding bonds rose on Friday. The company’s notes rose 7.8 cents to 77.6 cents on the dollar in April 2026, according to data compiled by Bloomberg. It is the biggest gain since June 2020.

Rajasthan, India-based Hindustan Zinc is a subsidiary of THL Zinc Ltd. Mauritius will buy the assets from its parent within 18 months, subject to regulatory approvals, the Indian miner said on Thursday. THL Operations Black Mountain Mining (Pty) Ltd. They include Skorpion Zinc (Pty) Ltd. in South Africa and Namibia, he said.

In the year The deal is important for Vedanta’s billionaire owner Agarwal, who is seeking to simplify the corporate structure of his commodities empire and cut Vedanta Resources’ debt after a failed attempt to delist Vedanta Ltd in 2020.

London-based Vedanta Resources is maturing $4.7 billion in bonds over the next four years and has paid off $900 million in notes due in the first half of 2023, according to data compiled by Bloomberg.

The move is a “major stroke” for minority shareholders of Vedanta Resources and Vedanta Ltd as the deal will help free up cash from the unit, capitalize on higher valuations and the structure will avoid long-term capital gains tax, said Ritesh Shah at Investec Capital Services Ltd. Analysts report. If improved cash flow is assumed to be used for repayments, it will provide the necessary relief to Vedanta Resources’ cash flow, he said.

Shares of Vedanta Ltd rose as much as 3 percent in Mumbai on Friday, while Hindustan Zinc fell 9.9 percent.

High-cost buying of global zinc assets will reduce cash holdings in Hindustan Zinc, broker Antike Stock Broking Ltd said. The company’s total gross investments and cash and cash equivalents have eased over the past few quarters, reaching 164.82 billion rupees ($2.03 billion). billion) showed an exchange file till the end of December.

Distributed flow

One way Agarwal generates cash is through dividend payments from Hindustan Zinc. The company on Thursday declared a third interim dividend of 13 rupees a share for a total of 55 billion rubles. This is in addition to the 154 billion rupees already paid this fiscal year.

Paying 2% of Hindustan Zinc’s consolidated revenue to Vedanta for brand and strategic management services will add additional cash to the parent.

Also, Hindustan Zinc, which appointed Agarwal’s daughter Priya Agarwal Hebar as the company’s chairman, beat analysts’ estimates for its third-quarter net income. Vedanta owns 65 percent of the mine, while the Indian government owns 30 percent.

(all updates)

Most read from Bloomberg Business Week

©2023 Bloomberg LP



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *