Vedanta Iron and Steel Limited Subjected to Covenants under US$ 2.25 Billion Facility Agreement

Vedanta Iron and Steel Limited Subjected to Covenants under US$ 2.25 Billion Facility Agreement​

Vedanta Iron and Steel Limited (VISL) is subject to covenants and identified clauses within a major Facility Agreement executed by promoter group entities, detailing terms related to debt repayment and corporate funding for the VRL Group.

The agreement, signed on July 20, 2026, establishes the parameters of a significant financial arrangement involving VISL’s associated entities. While Vedanta Iron and Steel Limited is not a direct signatory to the Facility Agreement, certain covenants outlined within the document are effective from the date of execution or the first Utilisation Date, depending on the specific clause.

The purpose of the agreement includes the repayment and payment of interest and other amounts accrued on the Financial Indebtedness of the VRL Group (including Refinanced Existing Loans), as well as payments for fees, costs, and expenses related to the transactions contemplated under the Finance Documents. The funds are designated for general corporate purposes of the VRL Group, with specific restrictions preventing proceeds from being used to finance or refinance thermal coal infrastructure that violates applicable law, or if remitted to India in a prohibited manner.

Financial Commitment and Parties Involved​

The Facility Agreement has set a total maximum commitment aggregating US$ 2,250,000,000 among the involved parties. As of the date of the intimation, the commitment from original lenders stood at US$ 1,545,000,000, with an available increase commitment of up to US$ 705,000,000.

Key entities participating in the agreement include:

Covenants and Restrictions on VISL​

The agreement imposes specific restrictions and conditions upon VISL through identified clauses and covenants. No liabilities have been directly imposed upon VISL, but the quantification of restrictions is based on customary covenants agreed upon by the Borrower and Guarantors in their capacity as members of the promoter group.

Restrictions apply primarily when VISL becomes a Material Subsidiary of VRL. These include:

• The creation of security over assets or shares of VISL.
• The sale, transfer, or disposal of non-ordinary course assets by VISL.
• Investment in or acquisition of material assets or business by VISL outside the defined sectors (mining, metals, coal and gas exploration/production, infrastructure, power or energy).

Additionally, the Facility Agreement includes standard covenants that restrict certain actions taken by VISL, such as entering into any material contract or arrangement with a third party other than in the ordinary course of business and on arm's length terms.

The agreement is supported by a wide range of international Arrangers and Lenders, including Citibank, N.A., Citigroup Global Markets Asia Limited, Standard Chartered Bank, Barclays Bank PLC, DB International (Asia) Limited, First Abu Dhabi Bank PJSC, JPMorgan Chase Bank, N.A., Mashreq Bank PSC, Standard Chartered Bank (Mauritius) Limited, and Sumitomo Mitsui Banking Corporation Singapore.

VISL Stock Price Movement​

Shares of Vedanta Iron and Steel Limited slipped by 0.54% today, closing at ₹31.10 after trading in the commodities sector. The stock accounted for a daily volume of 27.20 million shares.