Adani prepays $500 mn debt for Ambuja cement, returns $2.15 billion loan taken pledging shares

Mumbai: The struggling Adani Group announced on Sunday that it had paid back debts totalling USD 2.65 billion to end a prepayment program before the deadline of March 31 and reduce overall leverage in an effort to regain investor confidence following a damning report of a US short seller.

The Adani Group announced in a statement that it has returned USD 2.15 billion in loans obtained by pledging shares in the conglomerate's publicly traded companies as well as another USD 500 million in loans obtained for the purchase of Ambuja Cement.

The announcement comes within days of the group saying it has pre-paid Rs 7,374 crore (about USD 902 billion) loans that were taken pledging shares in four group companies. This has now been scaled up to USD 2.15 billion.

While Adani group has not detailed the source of money for repayment of loans, these came within days of the promoters selling minority stakes in four listed companies to US-based GQG Partners for Rs 15,446 crore.

“In continuation of promoters’ commitment to repay the promoter leverage, Adani has completed full prepayment of margin linked share backed financing aggregating to USD 2.15 billion, well before the committed timeline of March 31, 2023,” it said. “In addition to above, promoters have also prepaid a USD 500 million facility taken for Ambuja acquisition financing.” This, it said, was in line with promoters’ commitment to increase equity contribution and promoters have now infused USD 2.6 billion out of the total acquisition value of USD 6.6 billion for Ambuja and ACC.

“The entire prepayment program of USD 2.65 billion has been completed within 6 weeks, which testifies the strong liquidity management and access to capital at sponsor level, supplementing the solid capital prudency adopted at all portfolio companies,” the statement said.

The last announcement of prepayment of share-backed financing of Rs 7,374 crore on March 7 was followed by more shares belonging to companies of the group being pledged as security for loans taken by the group’s flagship firm.

On March 8, SBICap Trustee in notices to stock exchanges had stated that a further 0.99 per cent shares in Adani Green Energy Ltd were pledged “for the benefits of the lenders” of Adani Enterprises Ltd. An additional 0.76 per cent shares in Adani Transmission Ltd were also pledged to banks, the trustee said.

With the latest pledge, the total shares in Adani Green Energy Ltd – the group’s renewable energy company – that were encumbered with SBICap was 2 per cent. In the case of Adani Transmission, this came to 1.32 per cent.

The March 7 statement stated that the repayment of Rs 7,374 crore will release the pledge on shares of promoters in four group companies, and together with repayments done earlier, the group has prepaid USD 2.016 billion of share-backed financing.

Founder chairman Gautam Adani and his brother Rajesh on behalf of SB Adani Family Trust on March 2 announced the sale of shares in flagship incubating firm Adani Enterprises Ltd (AEL), port company Adani Ports and Special Economic Zone Ltd (APSEZ), electricity transmitting firm Adani Transmission Ltd (AEL) and renewable energy firm Adani Green Energy Ltd (AGEL).

That sale helped the group turn the narrative building since US short-seller Hindenburg Research released a damning report on January 24.

The 10 listed Adani Group companies, which together had lost about USD 135 billion in market value following the report, have seen stock prices rise in successive trading sessions ever since.

In September last year, CreditSights, a Fitch Group unit, said the group was “deeply overleveraged” as it used debt to expand an empire centred on ports and coal mining to include airports, data centres and cement as well as green energy.

In the January 24 report, US short-seller Hindenburg Research flagged “substantial” debt levels at the group while alleging accounting fraud and the use of offshore shell companies to inflate stock prices.

The group has denied all Hindenburg allegations, calling them “malicious”, “baseless” and a “calculated attack on India”.

It is now hoping to claw back the narrative by choosing slow and steady growth over the breakneck, mostly debt-fuelled, expansion spree of recent years.

It has already scrapped a Rs 7,000-crore coal plant purchase, decided not to bid for a stake in state-backed energy trading firm PTC, reined in expenses, repaid some debt and promised to repay more.

Adani Group’s gross debt has doubled in the last four years. It has almost USD 2 billion worth of foreign-currency bonds coming up for repayment in 2024.

The group’s gross debt has grown from Rs 1.11 lakh crore in 2019 to Rs 2.21 lakh crore in 2023, according to a presentation made to investors last month.

With PTI inputs