Glencore International AG, one of the world's largest diversified natural resource companies, has lent $250 million to Vedanta Resources (VRL), the holding company of the Vedanta group. The loan is secured by a 4.4% stake in VRL's India-listed subsidiary, Vedanta.
Glencore is a Switzerland-headquartered mining and natural resources company that was founded in 1974. The company is a rival to the billionaire Anil Agarwal-owned Vedanta group in several geographies.
The loan agreement was signed on May 25, and VRL is required to take certain actions on behalf of its subsidiaries, Westglobe, Richter Holding and Finsider International Company, or FICL (third-party obligors). VRL, Westglobe, Richter and FICL are members of the promoter group of Vedanta Ltd.
A charge has been created on all the issued shares of FICL by Westglobe and Richter in favour of Glencore. This means that Westglobe and Richter cannot sell, transfer or otherwise dispose of any shares held by them in FICL. FICL is also restricted from selling, transferring or otherwise disposing of shares held by it in Vedanta.
A share charge was executed on May 25 between Westglobe, Richter and Glencore, and a pledge was created on all shares held by Westglobe and Richter in FICL. A non-disposal undertaking (NDU) was also executed on May 25 amongst FICL, Glencore and Catalyst Trusteeship, an onshore NDU agent. FICL has provided an NDU on 4.4% shares, worth Rs 4,675 crore, of Vedanta that it holds.
Vedanta's market valuation was Rs 1.06 trillion. On May 25, Vedanta said it had pledged its entire 64.5% stake in Hindustan Zinc to raise funds. A day later, Vedanta informed the stock exchanges that its promoter could not create a new charge on their 68% stake in the company.
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