Vedanta Ltd raises Rs 8000 crore secured term loan from Union Bank of India

Anil Agarwal-promoted Vedanta Ltd has availed secured term loan of Rs 8,000 crore from of India by pledging its shares of Hindustan Zinc Ltd, three people aware of the matter told ET.

Proceeds of the loan, availed at 7.75%, were used to prepay high-cost debt raised two years ago, they said.

Vedanta prepaid Rs 10,000-crore term loans availed from four local banks at over 10% in December. It repaid the entire Rs 5,000 crore loan of State Bank of India, Rs 2,000 crore each of Bank of Baroda and Indian Bank, and Rs 1,000 crore loan of

, one of the persons said.

Vedanta, SBI, Union Bank of India, Yes Bank and Bank of Baroda did not respond to ET’s queries as of press time Tuesday.

Indian Bank could not be reached for comments.

This is the largest single-ticket loan provided by Union Bank to a double A-rated private company.

“The benefits of merging the PSU banks are reflected in such transactions which were not possible earlier,” a bank analyst said.

In April 2020, Union Bank had acquired two state-owned banks – Andhra Bank and Corporation Bank – following directives from the central government. The merged entity now ranks among the top five PSU banks in terms of total business.

Union Bank’s management committee on December 14 sanctioned Rs 8,000 crore loan to Vedanta, the sources said.

Vedanta has pledged 14.8% shares of Hindustan Zinc with Union Bank as security among other things, one of the persons said. Vedanta Ltd hold 64.9% in Hindustan Zinc.

As per the terms of the loan, if the shares of Hindustan Zinc fell below security cover, the company will deposit an equivalent amount with the bank to bridge the gap, the person said.

The interest rate is pegged at 50 basis points spread over Union Bank’s one-year MCLR, the marginal cost of fund-based lending rate which is now at 7.25%.

Of the Rs 10,000 crore prepaid, Rs 8,000 crore was raised from Union Bank, Rs 500 crore each was raised from IDBI Bank and

as non-convertible debentures in the last week of December, and Rs 1,000 crore was from internal accruals.

Vedanta hit the headlines when it announced restructuring plans in mid-November. The company announced that it would demerge its aluminium, iron and steel, and oil and gas businesses as standalone entities and list them separately.


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