INSUBCONTINENT EXCLUSIVE:
Highly leveraged Indian tycoons are having a rough time
But while his relentless rise and spectacular fall hog headlines, a smaller storm may be brewing for another well-known magnate
has a pile of debt, including a $1 billion bond due January
commodities surging to their best quarter in more than three decades, Agarwal was toying with the idea of merging debt-laden Vedanta
Resources with its cash-rich, Mumbai-listed unit, Vedanta Ltd
from almost $10 billion in March last year to a little under $8 billion
September 2023, according to S-P Global Inc
But it was when Agarwal tried to secure the finances for $1.5 billion in loan and bond repayments between September this year and January
2024 that he hit a roadblock.
What was supposed to be a quick dash to the ATM has become an uncertain enough adventure for Vedanta
Resources bondholders to drive the price of the August 2024 note below 70 cents on the dollar
The next few weeks will be crucial for fundraising
investment grade.
What happened to get everyone worried was this: Hindustan Zinc Ltd., which Agarwal had started buying from the Indian
government two decades ago in a privatization deal, has a cash pile, albeit much smaller than before, of $2 billion
Plus, the miner garners between $300 million and $600 million Ebitda every quarter
So Vedanta Ltd., which now owns 65% of the firm, decided in January to offload THL Zinc Ltd
Mauritius to Hindustan Zinc
That cash deal, representing mining interests in South Africa and Namibia, was valued at roughly $3 billion in phases over 18 months
New Delhi, which still owns about 30% of Hindustan Zinc, balked at the transaction
17 letter, threatening to explore legal avenues if Hindustan Zinc still decided to go ahead with the purchase.
This presents two problems
impaired, forcing him to borrow more
Technology Group for a $19 billion semiconductor factory might come under a cloud.
Already, that project is being watched closely by
involvement, citing its lack of chipmaking competence
Back then, the zinc miner helped him out with a special dividend
Besides, as a minority shareholder, the finance ministry also got its share of the bounty
This time around, though, Agarwal seems to have overreached.
A New York short seller has accused the Adani group of stock-price
manipulation and accounting fraud, allegations that the former centi-billionaire has unequivocally denied
But his stocks keep getting pummeled
With the scandal putting the Modi administration under heightened scrutiny about entanglement of public purpose with private profit,
piece, and these are the personal opinions of the writer
They do not reflect the views of www.business-standard.com or the Business Standard newspaper.
