07.12.2012 12:36
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Vedanta Resources Plc -- Moody's affirms Vedanta's ratings; outlook remains negative

Singapore, December 07, 2012 -- Moody's Investors Service has affirmed Vedanta Resources plc's corporate family rating at Ba1 and its senior unsecured rating at Ba3.

The outlook for both ratings remains negative.

RATINGS RATIONALE

Vedanta's rating reflects its earnings generation underpinned by its acquisition of Cairn India Ltd. (CIL) in December 2011 but its operating cash flow is restrained by softer commodity prices in the current year. While capital investment can be deferred to compensate for weaker cash flow, the purchase of the Government of India's stake in Hindustan Zinc Ltd. (HZL) at some stage, and the Group's refinancing requirements over the next nine months leave undue pressure on its liquidity and rating. Nevertheless, Vedanta still showed USD484 million of free cash flow post-expansionary capex in H1 FY13.

"Vedanta's EBITDA for the financial year ended March 2013 will include a full twelve months of Cairn India instead of the less than four months' of contribution made in FY12. However, given the output challenges in the iron ore business and only modest output ramp-ups elsewhere, EBITDA in H2 FY13 is not expected to advance on that achieved in H1 FY13," says Alan Greene, a Moody's VP-Senior Credit Officer.

"The bedrock of the business is clearly Vedanta's 58.5% stake in Cairn India, and following its recent restructuring, it is now able to convert its cash flow into dividends." continues Greene, also Moody's Lead Analyst for Vedanta.

Moody's notes the progress being made towards refinancing forthcoming debt maturities, but expects companies to have confirmed funding well in advance of repayment dates. However, Moody's concerns are partially alleviated by Vedanta's track record of timely access to global debt capital markets and through its subsidiaries, to bank finance in India. At the same time, Moody's is affording some leeway to allow for the Group's structural changes underway.

"The formation of Sesa-Sterlite should be completed this month and we expect the HZL purchase to be close behind," says Greene. "Once the new entity is finalised, it may be preferable to raise debt finance in this vehicle, which will have its own, substantial operating cash flow as well as significant dividend income, and so we expect Vedanta to be constantly reviewing its funding options", continues Greene.

Moody's retains the two-notch differential between the corporate family rating of the Group and the senior unsecured debt issued by the Parent company. The primary driver for this remains the inherently weak financial profile of the standalone UK-listed entity. At the same time, the proportion of priority debt in the subsidiaries to total debt remains uncomfortably high, bearing in mind that Vedanta's creditors are subordinated to the minority shareholders and not just the creditors of the operating subsidiaries. The gap may change once the new Sesa Sterlite structure has crystallized and on gaining access to the liquid funds currently trapped within HZL.

There is limited upward pressure on the rating over the near-term. However, the outlook could be stabilized if 1) commodity prices, especially oil, move higher, thus supporting cash flow growth; 2) CIL maintains or increases its output; 3) Vedanta's refinancing of maturing debt progresses smoothly and 4) the restructuring of Indian subsidiaries is completed.

Conversely, the ratings could come under downward pressure if 1) CIL encounters material production difficulties; 2) the parent remains thinly capitalized with less than expected dividends upstreamed from the core operating subsidiaries; 3) Vedanta undertakes further acquisitions, investments or shareholder remuneration policies that include incremental debt beyond our expectations; or 4) it fails to satisfactorily execute its expansion projects in aluminium and power.

Credit metrics that Moody's would consider for a ratings downgrade include CFO (less dividends)/Adjusted Debt below 15%, Adjusted Debt to EBITDA exceeding 3.5-4.0x, or EBIT interest coverage declining to 3.5x or less on a sustained basis.

The principal methodology used in rating Vedanta was the Global Mining Industry Methodology published in May 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Alan Greene VP - Senior Credit Officer Corporate Finance Group Moody'sInvestors Service Singapore Pte. Ltd.50 Raffles Place #23-06 Singapore Land TowerSingapore 48623 Singapore JOURNALISTS: (852) 3758 -1350 SUBSCRIBERS: (65) 6398-8308 Philipp L. Lotter MD - Corporate Finance Corporate Finance Group JOURNALISTS: (852) 3758 -1350 SUBSCRIBERS: (65) 6398-8308 Releasing Office: Moody's Investors Service Singapore Pte. Ltd.50 Raffles Place #23-06 Singapore Land TowerSingapore 48623 Singapore JOURNALISTS: (852) 3758 -1350 SUBSCRIBERS: (65) 6398-8308 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations -- Corporate Governance -- Director and Shareholder Affiliation Policy."

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31.01.14
Vedanta Resources Profit Rises (EN, The Wall Street Journal Deutschland)
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Analysen zu Vedanta Resources plc

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30.08.2013Vedanta Resources haltenSociété Générale Group S.A. (SG)
17.05.2013Vedanta Resources kaufenCredit Suisse Group
08.04.2011Vedanta Resources neutralUBS AG
30.03.2011Vedanta Resources overweightMorgan Stanley
25.02.2011Vedanta Resources overweightMorgan Stanley
17.05.2013Vedanta Resources kaufenCredit Suisse Group
30.03.2011Vedanta Resources overweightMorgan Stanley
25.02.2011Vedanta Resources overweightMorgan Stanley
03.09.2009Vedanta Resources günstig bewertetFocus Money
06.06.2008Vedanta Resources kaufenFuchsbriefe
30.08.2013Vedanta Resources haltenSociété Générale Group S.A. (SG)
08.04.2011Vedanta Resources neutralUBS AG
16.05.2006Vedanta Resources ambition. bewertetBörseGo
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