UPDATE 4: 8:29 a.m. ET 10/12/2023: Adani Cements’ refinancing of its $3.8 billion debt taken on to acquire ACC Ltd. and Ambuja Cements Ltd. in 2022 is likely to be signed at around $3.1 billion to $3.3 billion, with an around $500 million equity infusion from its promoters needed to complete the deal after two banks dropped out during the process, said two sources close and one source familiar with the situation.
The loan raised for the refinancing will be split into three tranches maturing in six months, 18 months and 36 months, as compared to the original plan for a straight three-year loan for the entire $3.8 billion, the sources said.
The decision to split the loan into three tranches - $300 million with a six-month maturity, $300 million with an 18-month maturity, and $2.9 billion with a 36-month maturity - means the debt will be repaid within a shorter time frame, the sources said. The three-year secured loan tranche will pay around SOFR+ 500 bps, the sources said. The loan will have a greenshoe option for banks that are still completing documentation to join at a later date, the sources said.
The promoter will be infusing cash into the company to cover any shortfall in the loan in order to fully refinance the outstanding $3.8 billion, the sources said.
Reorg first
reported that Japanese banks, including MUFG Bank and Sumitomo Mitsui Banking Corporation, are likely to lend around $450 million each, higher than other banks like Barclays Bank, Standard Chartered Bank, and Deutsche Bank, which are seeking approval to lend around $250 million each, as reported.
DBS Bank, MUFG Bank, Sumitomo Mitsui Banking Corporation, Mizuho Bank and First Abu Dhabi Bank are likely to contribute a total of around $2.2 billion of the total loan amount, as reported. Some of the banks contributing upwards or $400 million will take part of their overall exposure in the tranches with shorter maturities, the sources said.
The $3.8 billion debt being refinanced comprises a $3 billion 18-month secured term loan and $800 million outstanding against an originally $1 billion two-year mezzanine facility, as reported.
An Adani Cements spokesperson did not respond to email and calls requesting a comment.
–Malvika Joshi, Dipika Lalwani
UPDATE 3: Barclays, Deutsche, SCB Approved to Commit $250M Each to $3.5B Adani Loan Refinancing - Media
UPDATE 3: 6:36 a.m. ET 10/10/2023: Barclays, Deutsche Bank and Standard Chartered have received internal approvals to lend $250 million each towards a syndicated loan of $3.5 billion to Adani Group, which is looking to refinance the debt it took out to fund the acquisition of Ambuja Cements,
Bloomberg reported, quoting sources familiar with the matter.
The three banks are part of a larger consortium, some of which are in discussion to lend about $400 million each, the report states.
Barclays, Deutsche, and StanChart declined to comment, while the Adani Group did not immediately respond to Bloomberg’s request for comment, the report states.
UPDATE 2: Adani Cements likely to close $3.5B Refinance Deal with Banks by September End; Loan by Banks Contingent on SEBI Affirming No Regulatory Lapses by Adani Group
UPDATE 2: 9:15 a.m. ET 9/4/2023: Adani Cements is likely to close by September end a $3.5 billion three-year loan to partially refinance the outstanding $3.8 billion debt taken to fund the acquisition of ACC Ltd. and Ambuja Cements Ltd. as banks involved in the refinance are in the process of taking internal approvals for lending, three sources close to the development said. Initially, the company had been aiming to raise a $3.8 billion loan to fully refinance the debt taken for the acquisition, but is unlikely to raise the entire amount due to some of the existing lenders not participating in the transaction, the sources said.
Japanese banks, including MUFG Bank and DBS Bank, are likely to lend around $450 million each, higher than other banks like Barclays Bank, Standard Chartered Bank, and Deutsche Bank, which are seeking approval to lend around $250 million each, the sources said. DBS Bank, MUFG Bank, Sumitomo Mitsui Banking Corporation, Mizuho Bank and First Abu Dhabi Bank are likely to contribute a total of around $2.2 billion of the total loan amount, the sources said.
While the company had been aiming to close the club loan by the end of August, the banks now expect the close by end September as the loan closure is contingent on the Securities and Exchange Board of India, or SEBI, affirming no regulatory lapses in its investigation, which was undertaken after allegations of regulatory violations and share price manipulation made by shortseller Hindenburg Research in its report against the Group, the sources said.
SEBI has already submitted its report with the Supreme Court of India but the contents of the report are not yet known to the banks, the sources said.
On Aug. 25, SEBI filed a status report with the Supreme Court of India on the investigations it has conducted into the allegations leveled by the short seller Hindenburg Research against Adani Group, as
reported. SEBI had conducted 24 investigations, of which 22 were final in nature and two were interim. In its interim investigation report, SEBI has sought information from external agencies, and upon receiving the said information, it will evaluate what further course of action it will take in the said matter. In the status report, SEBI provided steps taken to conduct the probe but did not disclose the findings, as further reported.
Previously, SEBI had filed an
application on Aug. 14 with the Supreme Court of India, seeking an additional 15 days to complete its investigation into the allegations leveled against Adani Group by shortseller Hindenburg Research, and then file a status report to the court, as reported. The Supreme Court of India had granted SEBI an
extension to Aug. 14 to complete the probe and file a report.
Meanwhile,
media reports alleging associates of the Adani family may have spent years quietly acquiring stock in the Adani Group’s companies and secretly investing hundreds of millions of dollars into the India stock market, citing documents obtained by the Organized Crime and Corruption Reporting Project, may have an impact on price negotiations, but the deal is expected to go through, the sources said.
All banks which had provided acquisition financing in September 2022, except Citibank and Intesa Sanpaolo, are likely to participate in the refinancing. Once approvals are received, the banks will provide a three-year secured club loan to the company, absorbing the outstanding $800 million mezzanine facility as well into the secured loan bucket, the sources said. The final pricing of the new loan is yet to be determined, the sources said, adding that while the cumulative pricing for the loan will be lower as compared to the existing outstanding senior and mezzanine facilities, the senior debt pricing will be higher. The company is trying to rein in the pricing to around SOFR+500 bps, the sources said.
Barclays Bank, DBS Bank, Deutsche Bank, MUFG Bank and Standard Chartered Bank were mandated lead arranger and bookrunners for the debt raised for acquisition financing by Adani Cements in September 2022. BNP Paribas, Citibank, Emirates NBD Bank, First Abu Dhabi Bank, ING Bank, Intesa Sanpaolo, Mizuho Bank, Sumitomo Mitsui Banking Corporation and Qatar National Bank were mandated lead arrangers for the transaction, as
reported.
In March and April, Adani Cements partly paid off the acquisition financing raised for the acquisition of Ambuja and ACC, including a
$500 million six-month bridge loan and
a $750 million founder share-backed loan, as reported. The remaining debt now includes a $3 billion 18-month secured term loan and an $800 million (originally $1 billion) mezzanine facility with a two-year maturity, as the sources said.
Of the existing debt outstanding the senior debt is priced at SOFR+4.25%, the sources said. The mezzanine piece pays around 8.5%, as
reported.
The borrowing was to back the acquisition of Holcim’s India stake in Ambuja Cements and ACC, as
reported. Holcim on Sept. 16
said that it had closed the sale of its business in India to the Adani Group, comprising its full stakes in Ambuja Cement at INR 385 per share and in ACC at INR 2,300 per share, resulting in cash proceeds of $6.4 billion, as further reported. The transaction comprises Holcim’s entire 63.11% stake in Ambuja Cement, which owns a 50.05% interest in ACC, as well as its 4.48% direct stake in ACC, as previously reported. The acquisition of the stakes in Holderind Investments, Ambuja Cements and ACC were through Mauritius incorporated Endeavour Trade and Investment, as reported.
Adani Group and Intesa Sanpaolo did not respond to emails requesting comments. Citibank declined to comment.
– Malvika Joshi, Dipika Lalwani
UPDATE 1: Adani Cements Management Aims to Replace $4B of Ambuja, ACC Acquisition Financing with Long-Term Debt; Ambuja, ACC to Operate as Different Brands
UPDATE 1: 7:54 a.m. ET 3/28/2023: Adani Cements management informed investors in Singapore on March 27 that it is targeting to refinance around $4 billion debt raised to finance the acquisition of Ambuja Cements Ltd and ACC Ltd by December to a longer tenor term-loan, two sources who attended the meeting said.
The company had plans to replace the existing debt raised for the acquisition with a three-year syndicated loan, as
reported, and initially expected to close the debt refinancing by the end of December and latest by January. However the group has not been able to close the transaction amid the scrutiny the Adani Group has come under following the release of the report by the short seller Hindenburg Research alleging corporate misgovernance and fraud, according to sources.
Deutsche Bank is the lead banker arranging the refinancing, sources said.
Adani Cements has partly paid off the acquisition financing raised for the acquisition of Ambuja and ACC including a
$500 million six-month bridge loan and
a $750 million founder share-backed loan, as reported. The remaining debt includes a $3 billion secured debt with a tenor of 18-months and a $1 billion mezzanine facility with a two-year maturity, the sources said.
Meanwhile, the company’s management also told investors that despite acquiring Ambuja and ACC from Holcim Ltd. last year, it intends to operate the two brands separately, leveraging on the brand value, the sources said.
The company also gave a capex guidance of INR 70 billion ($852.3 million) for the fiscal year 2024 ending March 31, 2024, the sources said, adding that the management targets to double the cement production capacity to 140 million tonnes per annum, or MTPA, by the fiscal year 2028 from 67.5 MTPA at present, the sources said.
The company also refuted news reports pertaining to the company planning to sell around 5% stake in Ambuja and ACC to pare down its debt, the sources said. However, the company had reached out to its relationship banks to discuss the stake sale proposal earlier this month, sources said.
Deutsche Bank declined to comment. Adani Group did not respond to calls and email requesting comment.
–Malvika Joshi, Dipika Lalwani
Original Story 1:27 a.m. UTC on March 27, 2023
Ambuja Cements, ACC to Hold Investor Roadshows in Singapore, Hong Kong March 27-31
Relevant Documents:
ACC Limited Intimation
Ambuja Cement Intimation
Adani Group companies Ambuja Cements Ltd. and ACC Ltd. separately announced to the BSE today March 27 that they will hold roadshows for investors in Singapore and Hong Kong from March 27 to March 31.
Adani’s cement business includes 63.22% stake in Ambuja Cement, which in turn owns 50.05% in ACC Ltd. In addition, Adani directly owns 6.64% stake in ACC, the joint investor presentation attached with the announcement states.
According to various media reports, Adani Group companies have been holding roadshows to assuage investor concerns after a critical report by U.S. short seller Hindenburg Research.