S&p global ratings, Financial services company

S&P Global Ratings said the proposed privatisation of Vedanta Resources Ltd's unit Vedanta Ltd will improve the group's corporate structure and credit profile.This is despite a likely increase in Vedanta Resources' leverage due to the transaction. The proposed privatisation is subject to several approvals, including by the Vedanta Ltd board of directors, which is scheduled to meet on May 18."We expect a tender offer only around June or July this year. Meanwhile, Vedanta Resources' ability to refinance its near-term debt maturities, especially the $670 million bond maturing in June 2021, remains the key rating driver", S&P said.A successful privatisation of Vedanta Ltd should increase the parent's refinancing options. "We may upgrade Vedanta Resources if its liquidity position improves as a result. However, a lack of progress on the refinancing over the next couple of quarters could lead us to lower the rating", the ratings agency said.Vedanta Resources' inefficient corporate structure and dependence on dividends from Vedanta Ltd for debt servicing have constrained its credit profile. A successful privatisation of Vedanta Ltd would improve Vedanta Resources' access to the subsidiary's cash flows. This will be due to more efficient dividend upstreaming (compared to about 50 per cent that is currently paid to minority shareholders)."Over time, we expect the privatization to improve liquidity at Vedanta Resources and facilitate deleveraging", S&P said."The benefits of the increased ownership will mitigate the increase in leverage following the privatisation. S&P said the exercise is likely to be debt-funded, and could add about $2.3 billion to Vedanta Resources' debt, assuming the privatization happens at the floor price of Rs 87.5 per share. The increase in debt is about 15 per cent of our adjusted consolidated debt estimate of $17 billion for the company as of March 2020."We believe the rise in debt is manageable considering the greater dividends available. However, if the funding of the privatization is short-term in nature, it could weaken Vedanta Resources' liquidity, especially with other debt maturities in the next 12 months. An increase in the tender price above Rs 87.5 per share is another risk, but we expect the company to be prudent while proceeding with the transaction", it said.Vedanta Resources is a U.K. incorporated commodities producer with assets primarily in India. It owns 50.1 per cent of Vedanta Ltd, its Indian subsidiary, which holds most of its assets.( With inputs from IANS )

Home

City

Latest News

Cricket

LT Premium

National

International

Maharashtra

Opinions

Chhatrapati Sambhajinagar

Nagpur

Entertainment

Photos

Business

Technology

Sports

Lifestyle

Social Viral

Lokmat Games

Health

Marathi Language Controversy

Maharashtra News

Mumbai Local

Weather Update

Mumbai Rains

Ahmedabad Plane Crash

S&p Global RatingsFOLLOW

S&p global ratings, Latest News

Business :India's economy likely to tank 9 pc due to Covid distress: S&P

S&P Global Ratings said on Monday it expects India's economy to contract by 9 per cent in the current fiscal year ending March 31, 2021 as rising Covid-19 cases will keep private spending and investment lower for longer. ...

Business :India's economy is in deep trouble: S&P

New Delhi, June 27 S&P Global Ratings said on Friday that the Indian economy is in deep trouble ... ...

Business :Global credit rating agencies validate govt's reforms programme: CEA

India's growth outlook presented by a leading global credit agency validates the Modi government's structural reforms programme, a key ... ...

Business :Global credit rating agencies validate govt's reforms programme: CEA

India's growth outlook presented by a leading global credit agency validates the Modi government's structural reforms programme, a key ... ...

Business :S&P keeps India's rating unchanged at 'BBB-', keeps outlook stable

S&P Global Ratings on Wednesday maintained India's sovereign credit ratings. The ratings agency affirmed its 'BBB-' long-term and 'A-3' ... ...

Business :Benefits of increased ownership will mitigate increase in leverage: S&P on Vedanta

S&P Global Ratings said the proposed privatisation of Vedanta Resources Ltd's unit Vedanta Ltd will improve the group's corporate ... ...