Indian billionaire Anil Agarwal has dismissed reports suggesting he is considering selling his stake in Vedanta. The speculation arose after several media outlets reported that Agarwal was exploring options, including divesting a minority stake in the company, to alleviate his business empire’s significant debt burden. However, a company representative has denied these claims, stating that “any talks of stake sale in Vedanta Ltd. is untrue and baseless.”

With Vedanta’s shares have dropped by 32% in the past year, its current market value is roughly $12.6 billion, with a 5% stake valued at approximately $630 million. However, the sources insist that selling a stake in Vedanta is a last resort for the billionaire, and he will only consider it if other fundraising options prove unsuccessful. On Thursday, Vedanta’s shares dropped by up to 5% on the BSE.

VRL Paying Back Loans

Vedanta Resources announced last week that it had repaid $250 million in loans that it had taken from Barclays Bank and Standard Chartered Bank. The company had stated that it has sufficient resources to meet its debt repayment obligations in the upcoming quarters. The repayment addressed any concerns investors may have had about the company’s financial position.

According to an exchange filing in February, Vedanta Resources has reduced its net debt by $2 billion in the current financial year. The company also plans to continue deleveraging from its net debt of $7.7 billion in the next two financial years. These measures are expected to improve the company’s financial stability and reduce its debt burden.

Hindustan Zinc Scenario

On Tuesday, Hindustan Zinc announced an exchange filing regarding its fourth interim dividend for the fiscal year 2022-23. The company stated that it would pay a dividend of Rs 26 per share, totalling Rs 10,986 crore. This comes in addition to the Rs 13 per share dividend announced in January, Rs 15.50 per share dividend paid in November, and the Rs 21 interim dividend issued in July of last year.

Vedanta Resources is reportedly considering using dividends from its subsidiary Hindustan Zinc Ltd. to help pay off its $400 million dollar-denominated bonds due in April. The Bloomberg report suggests that the strategy could be viable for Vedanta Resources, given the challenging economic environment for low-rated borrowers with significant debt loads.

Vedanta Resources’ financial situation has been under pressure due to surging global interest rates and a heavy debt load. To alleviate some of the financial pressure, Vedanta agreed in January to sell a zinc manufacturing business to Hindustan Zinc for $2.98 billion, to be paid out in phases over 18 months. However, the deal faced opposition from the Centre, which owns approximately 30% of Hindustan Zinc.