(Bloomberg) – Indian billionaire Anil Agarwal’s plan to cut a massive mountain of debt hit a roadblock after New Delhi said it would block the sale of a zinc manufacturing unit.
Most read by Bloomberg
The government has threatened legal action to prevent Agarwal’s Vedanta group from selling the unit to its subsidiary Hindustan Zinc Ltd. for sale, which is around 30% state-owned.
The move thwarts London-based company Agarwal’s plan to use the proceeds of the sale to pay off Vedanta Resources Ltd.’s debt. to use. S&P Global Ratings earlier this month indicated that the company’s debt could “come under pressure” if it is unable to raise $2 billion and/or sell its international zinc assets.
Hindustan Zinc agreed in January to sell the entity, THL Zinc Ltd. Mauritius to be bought from its parent company for US$2.98 billion in phases over 18 months. The government said at the time it planned to fight back.
Government officials on Hindustan Zinc’s board have opposed the plan and “will examine all available legal avenues” if the company decides to go ahead, New Delhi said on Friday in a letter to the company, a copy of which was distributed on Monday was published on the exchanges.
Hindustan Zinc said in a separate filing on Monday that it will submit the letter to the board and that a meeting of shareholders has yet to be called to approve the deal.
Based in Rajasthan state, the company has long been a cash cow for Agarwal, who has wrested money from it in the form of dividends over the years, with the latest proposed transaction seen as another way to raise more cash.
Hindustan Zinc’s total gross investments and cash and cash equivalents fell about 21% from the start of April 2022 to Rs.164.82 billion at the year-end, stock exchange documents show. Vedanta Resources, meanwhile, has $4.7 billion worth of bonds maturing over the next three and a half years, according to data compiled by Bloomberg.
(Updated with Hindustan Zinc’s comment in paragraph 6 and rewritten throughout)
Most Read by Bloomberg Businessweek
©2023 Bloomberg LP
Don’t miss interesting posts on Famousbio
