Mining giant Glencore lends $250 million to rival Vedanta Resources

Glencore International AG, one of the world’s largest globally diversified natural resource companies, has lent $250 million to Vedanta Resources Ltd (VRL), the holding company of the Vedanta group.

Set up in 1974, the Switzerland-headquartered Glencore is a mining and natural resources rival to billionaire Anil Agarwal-owned Vedanta group in several geographies.

In return, Vedanta Resources has encumbered 4.4 per cent in its India listed subsidiary, Vedanta Ltd, VRL said in a statement to the stock exchanges.

The company said VRL and Glencore International had signed a loan agreement of $250 million on May 25. According to the agreement, VRL is required to procure 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.

Post this, certain restrictions have been placed on Westglobe and Richter to sell, transfer or otherwise dispose of any shares held by them in FICL, and on FICL to sell, transfer or otherwise dispose of shares held by it in Vedanta Ltd, it said.

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.

Besides this, a non-disposal undertaking (NDU) was executed on May 25 amongst FICL, Glencore and Catalyst Trusteeship, an onshore NDU agent. FICL has provided an NDU on 4.4 per cent shares, worth Rs 4,675 crore, of Vedanta that it holds, it said.

Vedanta’s market valuation was Rs 1.06 trillion as on Tuesday. 

On May 25, Vedanta Ltd said it had pledged its entire 64.5 per cent stake in Hindustan Zinc to raise funds. A day later, Vedanta Ltd informed the stock exchanges that its promoter could not create a new charge on their 68 per cent stake in the company.