Lenders approval key to proposed Vedanta demerger as entire promoter holding pledged

As of June 2023 end, promoter group i.e. Vedanta Resources held 68.11 percent in Vedanta Limited or 253 crore shares. This entire holding is pledged with lenders

Vedanta will require lenders’ approval to go forward with the proposed demerger as 99.99 percent of promoter shareholding in the company is pledged.

“The outcome of this transaction doesn’t change anything for any pledged shares. We will take whatever approvals are needed,” said Arun Misra, executive director, Vedanta Ltd in an analyst concall held post the demerger announcement.

Also Read: Vedanta aims to attract sovereign wealth funds through demerger, eyes debt rationalisati

Promoters pledge shares when they need to raise funds but are unable to do so through conventional avenues.

As of June 2023 end, the promoter group i.e. Vedanta Resources held 68.11 percent in Vedanta Limited or 253 crore shares. This entire holding is pledged with lenders.

Earlier in May, Glencore International AG lent $250 million to Vedanta Resources. This loan was pledged against a 4.4 percent stake in Vedanta Ltd.

Furthermore, Vedanta Ltd’s holding in Hindustan Zinc is also pledged with lenders. As of June 2023 end, Vedanta Ltd held 64.92 percent or 274 crore shares. Of this, 99.37 percent was pledged, according to BSE data.

Vedanta Resources’ FY23 annual report states that Vedanta Ltd has signed a non-disposal undertaking (NDU) in respect of its shareholding in Hindustan Zinc to the extent of 50.1 percent of the paid-up share capital.

Also Read: Vedanta announces demerger to split business into six listed entities

Billionaire Anil Agarwal-owned Vedanta Ltd on September 29 announced the creation of independent verticals through the demerger of underlying companies, mainly its metals, power, aluminium, and oil and gas businesses to unlock potential value.

“By demerging our business units, we believe that will unlock value and potential for faster growth in each vertical. While they all come under the larger umbrella of natural resources, each has its own market, demand and supply trends, and potential to deploy technology to raise productivity,” Anil Agarwal, Chairman of Vedanta, said.