PRESS RELEASE: S&P Affirms 'BB' Rating On Vedanta; Outlook To Positive

21st Jun 2010 10:38

The following is a press release from Standard & Poor's: -- Metals and minerals prices have rebounded after a severe downturn in 2008. -- Vedanta is on schedule to deliver its sizable capital expenditure program. -- We revised our outlook on Vedanta to positive from stable. At the same time, we affirmed our long-term 'BB' corporate credit rating on Vedanta and the 'BB' issue rating on the senior unsecured notes. -- The positive outlook reflects our expectation that Vedanta's credit metrics are improving and could be commensurate with a higher rating. MUMBAI (Standard & Poor's) June 21, 2010--Standard & Poor's Ratings Services said today that it had revised its outlook on London-based mining and metals company Vedanta Resources PLC to positive from stable. At the same time, we affirmed the 'BB' long-term corporate credit rating on the company. We also affirmed the 'BB' issue rating on the company's senior unsecured notes. The positive outlook on the rating reflects our expectation that Vedanta's operating performance will improve over the next one year, supported by the progressive commissioning of sizable capacity expansion projects and benefits from a rebound in metal and mineral prices. We believe that Vedanta is on track to successfully commission its various capital expenditure programs and that metal prices will remain firm. "We anticipate Vedanta's capacity expansion projects to come onstream progressively over the next one to two years. The company's aluminum and power expansion plans are slated for commissioning over the next four quarters, and will bolster its production volumes," said Standard & Poor's credit analyst, Suzanne Smith, managing director, Corporate & Government Ratings, South and Southeast Asia. In addition, we expect Vedanta's iron ore mining capacity to increase. In our opinion, the combination of higher volumes, favorable prices, and a low cost profile will materially improve Vedanta's cash flows. In our view, Vedanta's consolidated liquidity position is adequate. The company's cash and liquid investments were about US$7.2 billion at March 31, 2010, sufficient to meet its short-term debt of about US$1.0 billion. "We could raise the rating if Vedanta successfully delivers on its major capital programs especially in its power, aluminum, and iron ore businesses; satisfactorily executes its recent asset purchase from Anglo American PLC (BBB/Stable/A-2); and maintains or improves its financial metrics," said Ms. Smith. We could revise the outlook to stable if: (1) metal prices weaken substantially, and persistently remain subdued; and (2) major operating disruptions at existing assets, delays in commissioning new assets, or any further debt-funded acquisitions significantly weaken the company's overall financial profile. 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(END) Dow Jones Newswires June 21, 2010 05:38 ET (09:38 GMT)