MUMBAI: Vedanta Resources Ltd faces a moment of reckoning as Indian billionaire Anil Agarwal’s miner seeks approval for a proposal that could help it buy more time to honour its debt liabilities.

Bondholders had until yesterday to give an early consent on a plan to push out due dates on US$3.2bil in bond repayments, a move that prompted S&P Global Ratings in December to cut the company’s rating deeper into junk.

Vedanta needs a green light from at least two-thirds of the bondholders in each of the three securities to proceed with the plan. A holder meeting will be held tomorrow.

The bid to revise the terms of its dollar bonds marks the latest attempt by Agarwal’s group to bolster its balance sheet, having already sold a stake in its Mumbai-listed subsidiary and secured a US$1.25bil private loan.

But the fact Vedanta borrowed money at 18% to refinance debt underscores concerns about its finances.

The miner is offering to pay US$779mil by early February for notes due this year and 2025, and plans to extend the maturity on the remaining principal by as many as four years.

The following is the consent exercise structure published on Vedanta’s website.

There is no proposed change to the principal amount or the coupon on notes due in April 2026.

The miner is seeking approval to revise the fixed charge coverage ratio, a leverage covenant.

S&P cut Vedanta Resources’ rating to CC from CCC, saying the move will likely result in a downgrade to selective default.

Still, it expects “good earnings and strong cash flows” at the group as commodity prices improve and its Indian units send back US$400mil to US$500mil in dividends each year - a key source of funds for the United Kingdom-based parent.

A group of adhoc holders of the company’s guaranteed notes have said that the firm didn’t include any feedback from them, and therefore the proposal doesn’t represent the best terms possible for the notes.

Vedanta responded saying that it had engaged with many noteholders before arriving at the plan.

The miner also extended the consent deadline for all the three dollar bonds by a few days to accommodate feedback from bondholders who were facing operational challenges amid year-end holidays.

Research firm CreditSights recommends bondholders give their consents for the amendments because the revised terms are more attractive.

But S&P Global is sceptical.

That’s because Vedanta hasn’t provided adequate compensation for the extension of maturities, the ratings assessor said. The company is also prioritising cash flows and proceeds from asset sales to meet obligations from the US$1.25bil credit facility over the other creditors, S&P added.

If Vedanta fails to get the required support, the focus will shift to the company’s ability to honour its US$1bil bond due Jan 21.

The dollar notes due this month were the most supportive of the firm’s liability management exercise, while the remaining three trade below the 80 US cents on the dollar mark often considered indicative of distress.

Still, the bond due in August 2024 rose 3.5 US cents on the dollar in December to 66.4 US cents, according to Bloomberg-compiled data. That’s the biggest monthly gain since September. Those on March 2025 notes advanced 3.1 US cents to 74.4 US cents.

Agarwal, who was raised in the Indian state of Bihar, took over his father’s business making aluminium conductors in the 1970s, and then branched into trading scrap metal.

He built Vedanta Ltd through a series of ambitious acquisitions: In 2001, Agarwal bought a controlling stake in then government-owned Bharat Aluminium Co and he followed that up with the purchase of another state-run firm, Hindustan Zinc.

He successfully bid for iron ore producer Sesa Goa Ltd. in 2007 and for Cairn India. Vedanta Resources also owns copper and zinc operations in Africa.

The company was the first in India to list in London back in 2003, before Agarwal took it private 15 years later when his Vedanta Inc bought out minority investors as part of efforts to streamline the group’s structure.

Agarwal has renamed Volcan Investments Ltd to Vedanta Inc.

It is this acquisition spree that caused the conglomerate’s debt to balloon. What are the next milestones?

 - Bloomberg