The proposed delisting of the Anil Aggarwal-led Vedanta Resources from the London Stock Exchange will have no immediate impact on its credit profile, although cash extraction risks remain from the announced complete takeover of the natural resources firm by its holding company, Volcan Investments Ltd., Moody’s Investor Service said on Thursday.
Earlier this week, Vedanta Resources and Volcan Investments, a holding company wholly owned by the Anil Agarwal discretionary trust, which owns a 66.53 per cent stake in Vedanta, announced it had reached an in-principle agreement on a possible all-cash offer for Vedanta’s remaining shareholding.
“A firm offer will require Volcan to pay an estimated $1 billion toward acquiring the balance stake of 33.47 per cent. If Volcan succeeds in increasing its stake to 90 per cent or above, it is likely that Vedanta will be delisted from the London Stock Exchange, making it a private company,” a Moody’s statement said.
The American rating agency said Volcan is a private company with limited public information on its finances. In 2017, Volcan raised an estimated $4.4 billion debt through the issue of convertible notes to buy a 19.35 per cent equity stake in Anglo American plc pledging 33 per cent of Vedanta shares as security for annual interest payments of $185 million.
Vedanta has a requirement under its bank loans to remain a listed company and will, therefore, need approval or waivers from its lenders prior to delisting.
For instance, private unlisted companies are not required to report when any of their shareholding is pledged against any borrowings.
