London-headquartered Vedanta Resources (VRL) has sought investors’ approval to extend the maturity date of its $3.15-billion dollar bonds, even as it secured a $1.25-billion new funding to repay part of the debt. The company has also offered to pay $779 million in February for notes due in 2024 and 2025.

Following the move, rating agency Standard and Poor’s downgraded VRL’s long-term issue ratings of bonds to ‘CC’ from ‘CCC’, citing extension of the bonds’ maturities.

With the consent exercise, VRL will improve the current structure and economics of the bonds through an improved security package, priority derisking or repayments and other enhancements, it added.

Vedanta Resources Investments and Vedanta Holdings Mauritius II, wholly-owned subsidiaries of VRL, were the borrowers.

The company intends to repay the bonds using a mix of cash and new bonds. Accordingly, it will exchange about half of the January 2024 bond with new bonds maturing in January 2027, and most of the August 2024 and March 2025 bonds with new ones maturing in December 2028.

VRL was earlier in talks to raise $1.25 billion from a clutch of foreign investors, which would be raised at higher interest rates than the existing ones. These investors included New York-based Cerberus Capital Management for $300-million loan, Davidson Kempner Capital Management and Varde Partners for $200 million each, and alternative investment firm Ares SSG for about $100-150 million.

However, VRL did not disclose the name of the investors.

VRL has a debt maturity of $1 billion in 13.875% bonds due in January 2024, which the company wants to refinance by December 23, and another $1 billion due in August 2024. Furthermore, it has a $3.1-billion debt obligation in FY25.

Separately, Indian mining major Vedanta (VEDL), in which VRL holds a 68.11% stake, has convened a board meeting on December 18 to approve second interim dividend for FY24.

In May, VEDL approved its first interim dividend of `18.50 per share for FY24 with a total payout of `6,877 crore. VEDL had announced a total dividend payout of `37,700 crore through five issuances in FY23 alone. The issuance of the dividend comes at a time when VEDL and VRL were seeking to shore up funds to trim debt.

Shares of VEDL ended up 0.61% at `254.75 on the BSE on Monday.