Vedanta, the metals and energy conglomerate, revealed plans on Friday to spin out its companies into six publicly traded subsidiaries in order to avoid a debt crisis.
The Anil Agarwal-promoted company said in a stock exchange announcement that the board has approved the demerger of various companies to unleash “significant value.” According to the regulatory filing, the pure-play, asset-owner business model will result in the separation and listing of aluminium, oil and gas, power, steel and ferrous materials, and base metals.
The business is undergoing a vertical demerger. According to the firm, stockholders will get one share of each of the five newly listed companies for every share of Vedanta. The corporate reorganization is considered as a bid to decrease the group’s multibillion-dollar debt load. Agarwal hinted in late August that the company would be split up into numerous entities to allow investors to wager on “pure plays.”
Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta will be the names of the newly formed companies. According to the company, some of the “resulting companies” are in the process of being formed.
At the end of March 2023, Vedanta’s net debt to ebitda (excluding Hindustan Zinc) was roughly 3.3X.VRL’s net debt was $12.7 billion at the end of March 2023, and it has been attempting to bridge the funding gap through dividends, the sale of Vedanta shares, and brand fees. Until Friday, Vedanta’s stock was trading near its 52-week lows at ‘208.
