Vedanta Resources raises Rs 9,500 crore via bond issue

Vedanta Resources today said it has raised $1.7 billion (Rs 9,500 crore) through issue of bonds, the largest ever offering by any Indian corporate, which will be used to part-finance Cairn India acquisition.

"Vedanta Resources Plc announced the pricing of the offering of bonds in the aggregate principal amount of $1.7 billion," the company, led by NRI industrialist Anil Agarwal, said in a statement.

"Vedanta intends to use the proceeds of the offering to refinance a portion of its obligations under the its existing 2010 term loan facility (that was entered into to partly finance Vedanta's acquisition of a controlling stake in Cairn India), which will result in a cancellation of Vedanta's commitments under a bridge facility, and to pay related fees and expenses and for general corporate purposes," it said.

This is a landmark transaction for Vedanta, and it believes this represents one of the largest corporate high yield bond issuances out of Asia ex-Japan, the natural resources giant said adding that it is the fourth successful bond transaction.

The company said: "The bonds are being offered and sold in two tranches, consisting of $1.2 billion aggregate principal amount of 6 per cent bonds due January 2019 and  $500 million aggregate principal amount of 7.12 due May 2023."

The bonds are being offered and sold in a private offering to qualified institutional buyers outside the United States and the offering is expected to close on June 3, 2013, subject to customary closing conditions.
     
"This transaction demonstrates the financial strength and global recognition of Vedanta Group as a major natural resources corporate. It is our fourth bond transaction and each time we have been met with increasingly overwhelming response by investors," said Anil Agarwal, chairman of Vedanta Resources.

Vedanta said this is the largest ever bond offering by any Indian corporate and a high yield Asian issuer and the "lowest coupon in the long 5 year tranche for an Indian high yield issuer in the G3 debt markets" besides being "one of the largest order-book size for an Indian issuer - in excess of $10 billion."

Bank of America Merrill Lynch, Barclays, Citigroup, J P Morgan, The Royal Bank of Scotland and Standard Chartered Bank are acting as Joint Global Coordinators, Joint Lead Managers and Joint Bookrunners and Deutsche Bank is acting as Joint Bookrunners for the issue.

The bonds, the company said, are expected on the closing date to be rated "Ba3" by Moody's, "BB" by S&P and "BB" by Fitch.