Vedanta in Talks With JPM, StanChart for $600M Bank Loan to Cut Financing Costs, Even as $1B Farallon Loan Talks Continue

Vedanta Resources Ltd., or VRL, is negotiating with two of its relationship banks for a cheaper $600 million loan at THL Zinc Ventures Ltd., even as it looks to raise a potential $1 billion facility from Farallon Capital Management at the same entity, a source close and two sources familiar said. The company has also included a private credit fund in the discussions along with the banks for the potential $600 million loan, the sources added.

THL Zinc is a wholly-owned offshore subsidiary of VRL’s Indian listco Vedanta Ltd. or VDL.

With the Farallon loan deal still on the table, VRL is trying to reduce its cost of refinancing, and has returned to talks on fundraising with two of its relationship banks - JP Morgan and Standard Chartered Bank - to try and close the $600 million loan by mid-May at the latest, the sources said. The company is pushing for loan closure by May 15, the sources said, adding that the timeline is very tight as terms of the loan are still being discussed.

The company must close either the Farallon loan or the bank loan by next week, then draw down the funds in order to upstream them as a special dividend to VRL from VDL, in time to refinance VRL’s $500 million 7.125% bonds due May 31, the sources said.

The loan from the banks could be priced at around 12% and is expected to have a maturity of three years, the sources said. Barclays and Deutsche Bank, the two other lenders who were initially in discussions with the company in March to lend at THL Zinc, are not participating in talks as they have taken INR 15 billion and INR 11 billion exposure at VDL, respectively, in April, the sources added.

A Vedanta spokesperson did not respond to email and text messages requesting comment. Spokespersons for JPMorgan and Standard Chartered declined to comment.

–Malvika Joshi