Vedanta will raise $ 8 billion for the BPCL auction

Billionaire Anil Agarwal’s Vedanta Group plans to raise up to $ 8 billion through a mix of debt and equity to secure funding for the acquisition of Bharat Petroleum Corp. said.

Vedanta Resources Plc, based in London, has initiated talks with a lot of banks to raise funds, people said, seeking anonymity because the talks are private.

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“Discussions are underway to appoint an anchor bank for this purpose, and talks with JP Morgan are at an advanced stage,” said one of the two.

Last month, the mining conglomerate showed a preliminary interest in buying the 53% government package from BPCL. The sale, which is part of India’s asset sale program, is expected to bring the government EUR 45 billion and aims to help it offset the loss of revenue caused by the covid disruptions and to provide funding for additional spending to stimulate the economy.

Both Vedanta and JP Morgan declined to comment.

The Vedanta Group’s interest in India’s second-largest retailer stems from synergies with the existing oil and gas business (formerly Cairn India), which accounts for about a quarter of India’s annual crude oil production.

“EoI (expression of interest) The vision for BPCL is to assess potential synergies with our existing oil and gas business. EoI is in a preliminary stage and has an exploratory character, “the company said.

Analysts, however, questioned the group’s ability to raise all funding on its own, given its precarious finances. While BPCL’s dividend payments could cover the cost of debt for any acquisition, “the question we have is how would Vedanta Ltd (an Indian unit of Vedanta Resources) secure financing, given the leverage concerns at Vedanta and the parent company, ”JP Morgan said in a November report.

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Buying a 75% stake in BPCL (53% from the government and 22% through an open bid) would cost Vedanta 64,200-97,600 million depending on price ( 395-600 per share), the report is added.

“Vedanta is aware of the challenges it faces in raising funds and therefore wants the action partners on board to jointly purchase BPCL,” said the second person quoted above. own funds to bid jointly “, added the second person. The names of the EP funds could not be established immediately.

The Vedanta Group faces an upward task in meeting its maturity debt obligation in the coming quarters, and investors have expressed concern about the group’s ability to successfully repay bondholders.

Bloomberg reported on Dec. 10 that Vedanta Resources has provided much-needed funds by selling billions of dollars of banknotes at one of the highest yields for a dollar bond in Asia this year. It priced the January 2024 bond on Wednesday at a yield of 13.875%. Vedanta Resources plans to use the money to fund a $ 670 million redemption offer for banknotes maturing in June 2021.

The stems grew at the company after its attempt to eliminate the Indian unit Vedanta Ltd failed in October. The planned delisting would have allowed the parent easier access to cash there.

Moody’s Investors Service further downgraded Vedanta Resources’ credit rating to junk territory earlier this month, the Bloomberg report said.

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