Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<p><br/> The Q1/20-21 results from Vedanta Limited (VEDL) were in line with expectations, considering the negative impact of COVID-19. Leverage increased slightly but remains low for VEDL with Net Debt/EBITDA at 1.2x, while we estimate Net Debt/EBITDA for Vedanta Resources Limited (VRL) is a weak 3.75x. Liquidity at VEDL remains adequate, and its privatisation remains a key near-term credit driver.<br/><br/> Having raised USD 3.15 bn in funds, VRL can afford to buy out all the minority investors at c. INR 127-140/share. That said, it only needs to buy at least 90% of the voting rights, and VEDL has ADS with no voting rights. This means that VRL can pay as much as c. INR 170-175 for each of the common shares listed in India, or a 25-26% premium over Friday’s closing price. With early bids this morning around INR 138, we see a high likelihood that the discovered price will be at or below INR 175, allowing for the transaction to be completed with the cash and loan commitments on hand.<br/><br/> Overall, we expect: [1] the privatisation will succeed; [2] VRL's credit profile will improve due to the simpler corporate structure and more efficient cash upstreaming; and [3] the rating agencies will enact upgrades.<br/></p>

  The Q1/20-21 results from Vedanta Limited (VEDL) were in line with expectations, considering the negative impact of COVID-19. Leverage increased slightly but remains low for VEDL with Net Debt/EBITDA at 1.2x, while we estimate Net Debt/EBITDA for Vedanta Resources Limited (VRL) is a weak 3.75x. Liquidity at VEDL remains adequate, and its privatisation remains a key near-term credit driver.   Having raised USD 3.15 bn in funds, VRL can afford to buy out all the minority investors at c. INR 127-140/share. That said, it only needs to buy at least 90% of the voting rights, and VEDL has ADS with no voting rights. This means that VRL can pay as much as c. INR 170-175 for each of the common shares listed in India, or a 25-26% premium over Friday’s closing price. With early bids this morning around INR 138, we see a high likelihood that the discovered price will be at or below INR 175, allowing for the transaction to be completed with the cash and loan commitments on hand.   Overall, we expect: [1] the privatisation will succeed; [2] VRL's credit profile will improve due to the simpler corporate structure and more efficient cash upstreaming; and [3] the rating agencies will enact upgrades. 

Vedanta Resources - Event Flash - Q1 FY 2020-21 Results, Privatisation Update - Lucror Analytics

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>On the 30th of September, the <a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> AGM took place to approve the audited financial results of the fiscal year ended 31 March and to re-appoint a certain number of directors. Voting results are linked <a href="https://www.bseindia.com/stock-share-price/vedanta-limited/vedl/500295/voting-results/" target="_blank" rel="noopener">here</a>. </p>
<p>On 1 October, <strong>Vedanta Limited</strong> reported that the promoters Vedanta Resources Limited and its indirect subsidiaries namely, Vedanta Holdings Mauritius Limited and Vedanta Holdings Mauritius II Limited, had, with the assistance of its agent KFin Technologies Private Limited, completed the dispatch of <a href="https://www.bseindia.com/xml-data/corpfiling/AttachHis/0a3309f5-7c2a-4b9e-9d5c-90c16c541dba.pdf" target="_blank" rel="noopener">Letter of Offer</a> to all public shareholders.</p>
<p>2 October saw the <a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/75e5b6d2-92f5-40f7-85bf-12a8e0cca785.pdf" target="_blank" rel="noopener">announcements</a> of the Letter of Offer along with a minor corrigendum in the newspapers.</p>
<p>On 3 October, <strong>Vedanta Limited</strong> reported its Q1 financials on Saturday 3 October, some 9-10 weeks later than normal (since the 2010-2011 year, the latest Q1 financials had ever been released was 31 July), with no good reason for the delay noted. Results came in many forms: <a href="https://www.vedantalimited.com/InvestorReports/Standalone%20Results%20June%202020.pdf" target="_blank" rel="noopener">Standalone financials</a>, <a href="https://www.vedantalimited.com/InvestorReports/Consol%20Results%20June%202020.pdf" target="_blank" rel="noopener">Consolidated Financials</a>, and a <a href="https://www.vedantalimited.com/InvestorReports/VEDL%20Results%20Presentation%20Q1%20FY2021.pdf" target="_blank" rel="noopener">Presentation</a>, but unlike prior years, there is no transcript.</p>
<div class="content-highlight">
<p>There are some really interesting pieces of information in this set of financial reports, especially in the auditor's letter. </p>
<p><strong>It appears to tell you more about the possibilities of the Delisting Offer. </strong></p>
</div>
<p>I note that the Reverse Book Build Auction commences tomorrow 5 October and goes through 9 October. </p>
<p>Details below the fold. </p>
<section>
<div id="ember23824">
<hr>
<div>
<p><em>Insights previously published in the timeline of the Vedanta Delisting Offer are listed below.</em></p>
</div>
<div>
<table class="table table-striped">
<tbody>
<tr>
<td colspan="3" style="width: 724.8px;">
<h3>Relevant Insights To Date</h3>
</td>
</tr>
<tr>
<td style="width: 72px;"><strong>Date</strong></td>
<td style="width: 134.4px;"><strong>Theme or Ticker</strong></td>
<td style="width: 476.8px;"><strong>Insight Title</strong></td>
</tr>
<tr>
<td style="width: 72px;">2019</td>
<td style="width: 134.4px;">Indian M&amp;A Guide</td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/quiddity-india-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:30885" rel="noopener">Quiddity India M&amp;A Guide 2019</a> </td>
</tr>
<tr>
<td style="width: 72px;">24 May 2020</td>
<td style="width: 134.4px;">Delisting Offers</td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/indian-delisting-exit-offers-know-your-process-and-the-games-played" target="_blank" data-smartkarma-citation="insights:39683" rel="noopener">Indian Delisting/Exit Offers - Know Your Process and The Games Played</a> </td>
</tr>
<tr>
<td style="width: 72px;">19 Jun 2020</td>
<td style="width: 134.4px;">Failed Exit Offers</td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/failed-exit-offers-in-india-lessons-for-vedl-adani-and-hexw" target="_blank" data-smartkarma-citation="insights:40492" rel="noopener">Failed Exit Offers in India: Lessons for VEDL, ADANI, and HEXW?</a> </td>
</tr>
<tr>
<td style="width: 72px;">27 May 2020</td>
<td style="width: 134.4px;">
<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd</a> </td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/vedanta-delisting-offer-how-it-goes-from-here" target="_blank" data-smartkarma-citation="insights:39761" rel="noopener">Vedanta Delisting Offer - How It Goes From Here</a> </td>
</tr>
<tr>
<td style="width: 72px;">22 Jun 2020</td>
<td style="width: 134.4px;">
<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd</a> </td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/vedanta-delisting-offer-opportunities-and-timing" target="_blank" data-smartkarma-citation="insights:40528" rel="noopener">Vedanta Delisting Offer: Opportunities and Timing</a> </td>
</tr>
<tr>
<td style="width: 72px;">25 Jun 2020</td>
<td style="width: 134.4px;">
<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd</a> </td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/vedanta-buyout-loan-huge-hindustan-zinc-div-but-may-change-vedanta-rbb-timing" target="_blank" data-smartkarma-citation="insights:40653" rel="noopener">Vedanta Buyout Loan = HUGE Hindustan Zinc Div But May Change Vedanta RBB Timing</a> </td>
</tr>
<tr>
<td style="width: 72px;">14 Jul 2020</td>
<td style="width: 134.4px;">
<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd</a> </td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/putting-sightlines-on-the-vedanta-discovered-price" target="_blank" data-smartkarma-citation="insights:41236" rel="noopener">Putting Sightlines on the Vedanta Discovered Price</a> </td>
</tr>
<tr>
<td style="width: 72px;">18 Aug 2020</td>
<td style="width: 134.4px;">
<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd</a> </td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/putting-sightlines-on-the-vedanta-delisting-offer-timing" target="_blank" data-smartkarma-citation="insights:42260" rel="noopener">Putting Sightlines on the Vedanta Delisting Offer TIMING</a> </td>
</tr>
<tr>
<td style="width: 72px;">7 Sep 2020</td>
<td style="width: 134.4px;">
<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd</a> </td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/vedanta-reaching-the-end-game" target="_blank" data-smartkarma-citation="insights:42969" rel="noopener">Vedanta: Reaching The End Game</a> </td>
</tr>
<tr>
<td style="width: 72px;">17 Sep 2020</td>
<td style="width: 134.4px;">
<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd</a> </td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/vedanta-more-fuel-for-the-fire" target="_blank" data-smartkarma-citation="insights:43316" rel="noopener">Vedanta : More Fuel For The Fire</a> </td>
</tr>
<tr>
<td style="width: 72px;">21 Sep 2020</td>
<td style="width: 134.4px;">
<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd</a> </td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/vedanta-vedl-cash-raised-money-flow-and-how-it-affects-delisting-offer-discovered-price" target="_blank" data-smartkarma-citation="insights:43429" rel="noopener">Vedanta (VEDL): Cash Raised, Money Flow, and How It Affects Discovered Price</a> </td>
</tr>
<tr>
<td style="width: 72px;">29 Sep 2020</td>
<td style="width: 134.4px;">
<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd</a> </td>
<td style="width: 476.8px;">
<a href="https://www.smartkarma.com/insights/vedanta-reverse-book-build-auction-it-s-on-and-the-schedule-from-here-is-tight" target="_blank" data-smartkarma-citation="insights:43694" rel="noopener">Vedanta Reverse Book Build Auction - It’s On And the Schedule From Here Is Tight</a> </td>
</tr>
</tbody>
</table>
</div>
</div>
</section>

On the 30th of September, the Vedanta Ltd (VEDL IN) AGM took place to approve the audited financial results of the fiscal year ended 31 March and to re-appoint a certain number of directors. Voting results are linked here. 
On 1 October, Vedanta Limited reported that the promoters Vedanta Resources Limited and its indirect subsidiaries namely, Vedanta Holdings Mauritius Limited and Vedanta Holdings Mauritius II Limited, had, with the assistance of its agent KFin Technologies Private Limited, completed the dispatch of Letter of Offer to all public shareholders.
2 October saw the announcements of the Letter of Offer along with a minor corrigendum in the newspapers.
On 3 October, Vedanta Limited reported its Q1 financials on Saturday 3 October, some 9-10 weeks later than normal (since the 2010-2011 year, the latest Q1 financials had ever been released was 31 July), with no good reason for the delay noted. Results came in many forms: Standalone financials, Consolidated Financials, and a Presentation, but unlike prior years, there is no transcript.

There are some really interesting pieces of information in this set of financial reports, especially in the auditor's letter. 
It appears to tell you more about the possibilities of the Delisting Offer. 

I note that the Reverse Book Build Auction commences tomorrow 5 October and goes through 9 October. 
Details below the fold. 




Insights previously published in the timeline of the Vedanta Delisting Offer are listed below.






Relevant Insights To Date



Date
Theme or Ticker
Insight Title


2019
Indian M&amp;A Guide

Quiddity India M&amp;A Guide 2019 


24 May 2020
Delisting Offers

Indian Delisting/Exit Offers - Know Your Process and The Games Played 


19 Jun 2020
Failed Exit Offers

Failed Exit Offers in India: Lessons for VEDL, ADANI, and HEXW? 


27 May 2020

Vedanta Ltd 

Vedanta Delisting Offer - How It Goes From Here 


22 Jun 2020

Vedanta Ltd 

Vedanta Delisting Offer: Opportunities and Timing 


25 Jun 2020

Vedanta Ltd 

Vedanta Buyout Loan = HUGE Hindustan Zinc Div But May Change Vedanta RBB Timing 


14 Jul 2020

Vedanta Ltd 

Putting Sightlines on the Vedanta Discovered Price 


18 Aug 2020

Vedanta Ltd 

Putting Sightlines on the Vedanta Delisting Offer TIMING 


7 Sep 2020

Vedanta Ltd 

Vedanta: Reaching The End Game 


17 Sep 2020

Vedanta Ltd 

Vedanta : More Fuel For The Fire 


21 Sep 2020

Vedanta Ltd 

Vedanta (VEDL): Cash Raised, Money Flow, and How It Affects Discovered Price 


29 Sep 2020

Vedanta Ltd 

Vedanta Reverse Book Build Auction - It’s On And the Schedule From Here Is Tight 







Vedanta Limited Reports Results: KEY Info on Deal Funding Embedded

Lakshmi Iyer, CFA

<p>We take a look at the covenant packages of bonds issued by <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> , <a href="https://www.smartkarma.com/entities/central-china-real-estate-ltd" target="_blank" data-smartkarma-citation="entities:513:1" rel="noopener">Central China Real Estate (832 HK)</a> , <a href="https://www.smartkarma.com/entities/evergrande-real-estate-group-limited" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande Real Estate Group (3333 HK)</a> , <a href="https://www.smartkarma.com/entities/vedanta-resources-limited" target="_blank" data-smartkarma-citation="entities:22202:1" rel="noopener">Vedanta Resources (VED LN)</a> , <a href="https://www.smartkarma.com/entities/oxley-holdings-ltd" target="_blank" data-smartkarma-citation="entities:1097:1" rel="noopener">Oxley Holdings (OHL SP)</a> and <a href="https://www.smartkarma.com/entities/future-retail-ltd-4b025726-3be6-41e3-9f59-22ab2a17a8b2" target="_blank" data-smartkarma-citation="entities:26799:1" rel="noopener">Future Retail (FRETAIL IN)</a> . This list consists of a mix of companies that we have covered as well as companies that are presently of investor interest - it is not exhaustive. We focus on covenants that are liberally defined and hence issuer friendly (as opposed to being investor friendly) as well as implications for investors.</p>

We take a look at the covenant packages of bonds issued by Softbank Group (9984 JP) , Central China Real Estate (832 HK) , Evergrande Real Estate Group (3333 HK) , Vedanta Resources (VED LN) , Oxley Holdings (OHL SP) and Future Retail (FRETAIL IN) . This list consists of a mix of companies that we have covered as well as companies that are presently of investor interest - it is not exhaustive. We focus on covenants that are liberally defined and hence issuer friendly (as opposed to being investor friendly) as well as implications for investors.

Asian High Yield – A Close Look at Covenants

Leonard Law, CFA

<p><br/> In this month’s “In-Focus” section, we consider China’s new Three Red Lines leverage guidelines for developers, which have been rolled out on a limited basis. We also look at the context for the policy’s introduction and its implications on credit access for industry players at large. <br/><br/> The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market. <br/></p>

  In this month’s “In-Focus” section, we consider China’s new Three Red Lines leverage guidelines for developers, which have been rolled out on a limited basis. We also look at the context for the policy’s introduction and its implications on credit access for industry players at large.    The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market.  

Asia HY Monthly - China's Three Red Lines - Lucror Analytics

<p><br/> The Asia HY Trade Book for the month of September includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.<br/></p>

  The Asia HY Trade Book for the month of September includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index. 

Asia HY Trade Book - September 2020 - Lucror Analytics

India

Vedanta Resources Limited operates as a diversified natural resource company. The Company extracts and process zinc, lead, aluminum, iron ore, copper, and silver, as well as focuses on oil and natural gas. Vedanta Resources serves clients worldwide.

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Vedanta Resources (VED LN)

Vedanta Resources - Event Flash - Q1 FY 2020-21 Results, Privatisation Update - Lucror Analytics

The Q1/20-21 results from Vedanta Limited (VEDL) were in line with expectations, considering the negative impact of COVID-19. Leverage increased...

Lucror Analytics

Vedanta Limited Reports Results: KEY Info on Deal Funding Embedded

$Vedanta Limit

Travis Lundy

Asian High Yield – A Close Look at Covenants

We take a look at the covenant packages of bonds issued by

Lakshmi Iyer, CFA

Asia HY Monthly - China's Three Red Lines - Lucror Analytics

In this month’s “In-Focus” section, we consider China’s new Three Red Lines leverage guidelines for developers, which have been rolled out on a...

Lucror Analytics

Asia HY Trade Book - September 2020 - Lucror Analytics

The Asia HY Trade Book for the month of September includes a summary of our recommendations, as well as our high-conviction ideas. The report...

Lucror Analytics

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