1st Apr 2016 06:53
LONDON (Alliance News) - Vedanta Resources PLC Friday said it has picked JP Morgan Securities PLC to launch a buy-back programme on behalf of the company in order to repurchase some of its outstanding bonds.
Vedanta said it will purchase up to USD148.6 million, or 20%, of the USD743.0 million outstanding balance on the 6.75% bonds that are due in 2016.
The company will also repurchase up to USD200.0 million, or 34%, of the USD582.0 million outstanding balance on the 5.5% guaranteed convertible bonds that are also due in 2016 which are related to Vedanta Resources Jersey Ltd.
Vedanta said it will either cancel or hold the 2016 bonds that it repurchases whilst the convertible bonds related to its subsidiary will be either be surrendered or cancelled, it said.
Purchases of the bonds will be financed by the company from its existing funds and from funds to be made available by Vedanta Ltd after it makes a part-repayment of an intercompany loan between the PLC and Vedanta Ltd.
Vedanta has also entered its close period on Friday, noting it sealed the arrangement regarding the buy-back with JP Morgan beforehand.
The company said, ahead of the close period starting, its lenders have consented to changing the company's covenants effective from March 31 to the end of September, which it said ensures the company can comply with those covenants.
Vedanta saw its corporate family and senior unsecured rating downgraded by ratings agency Moody's Investors Service earlier this month due to depressed commodity prices and the "refinancing risk" that faces the company.
Moody's Investors Service downgraded Vedanta's corporate family rating to B2 from Ba2, indicating a speculative investment. The ratings agency also downgraded the company's senior unsecured rating to Caa1 from B1, seven steps from investment grade, adding the outlook on all ratings was negative.
By Joshua Warner; [email protected]; @JoshAlliance
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