Vedanta Limited’s second quarter of 2022 has been a busy one in regard to its capital structure strategy. At the end of April 2022, Bloomberg’s Ryan Hesketh reported that the company was in talks with banks to raise US$ 2.5 to 3 billion in debt from Indian banks the company has financial banking relationships with, citing in Reuters.
The company indicates that the debt will be used to prop up its semiconductor and display manufacturing plants. “The oil-to-metals conglomerate decided in February to diversify into chip manufacturing and formed a joint venture with Taiwan’s Foxconn”, read the report. “It has a total planned investment outlay of $20 billion”.
Shareholders, however, remain in focus. “The company will issue $1.5 billion of dividends to shareholders, triggering a rally in the bonds of its parent that will use the income to pay down debt”, according to Swansy Afonso and Bijou George of Bloomberg. “The company will pay a dividend to shareholders that will provide some relief to its parent Vedanta Resources Limited which faces a number of maturities, beginning with a $1 billion note due in July 2022.”
“The large cash dividend is credit positive for Vedanta Resources Limited because it staves off some of the liquidity and refinancing risk tied to the holding company’s debt maturities in the first half of the fiscal year ending March 31, 2023 (fiscal 2023),” Moody’s said in an issuer comment.
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