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Vedanta Aluminium Ltd (VAL) subsidiary of Vedanta Resources is a manufacturer of metallurgical grade alumina and other high-quality aluminum products.
It has raised syndicated loan funds to increase its fully-integrated aluminium smelting capacity of its ongoing project in Orissa to nearly 2.6 mtpa by 2012. The company is expected to commission the second phase of a 500,000 tonne-per-annum aluminium smelter, with a 1,215-Mw captive power plant, at Jharsuguda in Orissa by the end of the current financial year. Earlier, it commissioned a 1.4-mtpa greenfield alumina refinery project and an associate 90-Mw captive power plant at Lanjigarh in Orissa in 2007.
SBI Capital Markets was the lead arranger for the transaction. The debt has been committed from more than 20 institutions. State Bank of India alone lent Rs 30bn. The loan has a 10-year tenor that includes a two-year construction period, a six-month moratorium and a 7.5-year quarterly repayment period. The interest rate is around 11.75% that is SBI's PLR and there is a front-end fee of about 20bp. There is an annual reset and the borrower can prepay the loan without any prepayment premium. The funding has limited recourse to the parent.
The total project cost is estimated at Rs320bn and it is being funded on a 60:40 debt to equity ratio.The company has already put Rs 135 bn equity in the project and the debt part has been raised now.The total debt amount is about Rs192bn and it is divided into three tranches. One is an existing term loan tranche of Rs19bn that was raised two years ago. The loan, which will mature in seven years' time, was provided by Bank of Maharashtra, Corporation Bank and Indian Bank. Vedanta Resources Plc and its subsidiary Sterlite Industries own 70.5 per cent & 29.5 per cent stake respectively in Vedanta Aluminium.
Earlier India’s HPCL-Mittal Energy Ltd. and HPCL-Mittle Pipelines Ltd. aimed to raise $200 mn each via overseas loan.
Transaction Reference : BS, Reuters
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