UPDATE 1: 10:18 a.m. ET 2/16/2023:
Editor's Note: The following story was published in the evening on Feb. 16, and has been republished during regular business hours to reach a wider audience.
Adani Group management during an investor call held today, Feb.16, said the group will limit certain merger and acquisition activity where there were no legal commitments made, to give confidence to investors and lenders about its deleveraging efforts and cutbacks to discretionary capex, according to two sources who attended the call. As a result, Adani Power will not go ahead with the acquisition of DB Power, management added.
Adani Power Ltd. in August 2022 had announced its plan to acquire DB Power at an enterprise value of INR 70.17 billion ($849.5 million),
as reported. Singh said the group’s net debt to EBITDA ratio will be below 3x by the end of the next fiscal year from 3.2x at present, the sources said.
Bond Repayments
Singh said Adani Green Energy’s $750 million 4.375% holdco bonds due September 2024 will have 100% cash coverage by June 30, as reported, adding that Adani Green’s 2024 notes are the most “volatile” and “mispriced” notes outstanding. Singh also said that the refinancing plan for its originally issued $500 million 6.25% bonds due in December 2024 backed by assets in restricted group 1 (RG1) is at an advanced stage of discussion and will be fully taken out through a 15-year privately placed paper, the sources said.
Singh also added that from March 2024 onwards all maturities at Adani Ports and Special Economic Zone, or APSEZ, will be met through fund flows from operations and the cash available at the company, according to sources. On APSEZ, Singh said that the company would reduce the leverage to 2.5x-3x from 3x-3.5x stated earlier, the sources said.
For Adani Green, future repayments will be from fund flows from operations, cash available or through fully underwritten financing against cash flows post fiscal year 2024, the sources said.
For Adani Transmission, future maturities will be paid using fund flows from operations and cash, except for one that will be completed in eight to 12 weeks, Singh said, according to the sources.
Adani Group has also engaged in discussions with MSCI and other rating agencies, the sources said.
Loan Against Founder Shares
The group will repay the remaining debt outstanding raised against founder-owned shares within the next 20 days, as reported. Subsequent to the prepayment of loans against shares there will be no borrowing linked to the value of shares that would result in a margin call, Singh said, according to the sources. Some shares kept as collateral for the security of the project financing lenders will continue to exist, Singh added, the sources said.
Singh said liquidity lines are available both at the sponsor and the opco level, undiminished from before, according to sources.
Adani Group bonds rallied after the investor call, sources said. Adani Green Energy’s $750 million 4.375% bonds due September 2024 were indicated at 81/84 from 76/78 earlier today and its $500 million 6.25% bonds due December 2024 were indicated at 92.5/95.5 from 90.5/91.5 earlier today, according to the sources. Adani Renewable Energy (RJ)’s $327.6 million 4.625% amortizing bonds due 2039 were indicated at 73.5/76.5 from 71.5/73.5.
APSEZ’s $650 million 3.375% bonds due 2024 were indicated at 92.5/95.25 from 90.5/91.5 earlier today, while its $500 million 4% bonds due July 2027 were indicated at 83.25/86.25 from 81.5/83, according to the buyside sources. Its $750 million 4.2% bonds due August 2027 were also indicated at 83.25/86.25 from 81.5/83.
Adani Electricity Mumbai Ltd.’s $1 billion 3.949% bonds due 2030 were indicated at 75/78 up from 73/74.5, while its $300 million 3.867% bonds due 2031 were indicated at 72/75 also up from 70.5/72.
Adani Transmission Ltd.’s $500 million 4% bonds due 2026 were indicated at 84.25/87.25, up from 83/84.5 earlier today and its $422.5 million 4.25% 2036 bonds were indicated at 73/76 from 71.5/73.5 earlier today, according to sources.
– Malvika Joshi, Dipika Lalwani
Original Story 8:49 a.m. UTC on Feb. 16, 2023BREAKING: Adani Group to Repay Outstanding Share-Backed Loans in Next 20 Days; Arrange 100% Cash Cover for Adani Green $750M Holdco 2024 Notes by June 30Adani Group’s management today informed its fixed income investors including holders of its dollar-denominated bonds that the group will repay the remaining debt outstanding raised against promoter shares within the next 20 days, according to two sources who attended the call. Reorg had first
reported on Feb. 3 that the group plans to retire $2 billion share-backed debt within the next four to six weeks.
Adani Group CFO Jugeshinder Singh also told the investors that Adani Green Energy’s $750 million 4.375% holdco bonds due September 2024 will have 100% cash coverage by June 30, the sources said, adding that the company will take the bonds out through a fully amortizing 15-year paper. Adani Green’s 2024 notes are the most “volatile” and “mispriced” notes outstanding, Singh added.
Singh also said the Adani Group has hired Grant Thornton to conduct a review of the group’s hedging policies and related party transactions. He also stated that for multiple businesses including Adani Transmission and Adani Green, future repayments will be within fund flows from operations and the cash available or through fully underwritten financing against cash flows.
– Malvika Joshi, Dipika Lalwani
More to follow…