Adani saga: From loan refinance to prepayment

Faced with margin calls, company to prepay $500 million loan to foreign banks group; source of funds undisclosed

Gautam Adani
Gautam Adani

Aditya Anand

Days after it was exploring the options of refinancing loans, the Adani Group announced plans to prepay Barclays Plc, Standard Chartered Plc, and Deutsche Bank AG, which are among the institutions that lent Adani $4.5 billion to finance the purchase of Holcim Ltd. cement assets last year.

This announcement makes it the second prepayment announcement. Last week, it was announced that promoters across Adani Group companies had prepaid $1.1 billion, or about Rs 9,000 crore, in borrowings ahead of its maturity in September 2024.

So, why is the Adani Group on a prepayment spree?

Officials explained that the reimbursement was intended to prevent additional damage to the group's investor confidence. According to Reuters, the Adani Group was forced to return the entire sum of a $1.1 billion share-backed loan due to a margin call of more than $500 million. "The prepayment has been made in view of “recent market volatility and in continuation with the promoters” commitment to decreasing overall promoter leverage backed by Adani listed company shares," the conglomerate said in a company statement.

To bolster investor trust, Adani has begun prepaying some of the loans with future due dates. Earlier on Tuesday, Adani Ports said it anticipated to repay Rs 5,000 crore in loans and bonds in the coming fiscal year. Adani Ports CEO Karan Adani stated that the company's FY24 EBITDA objective was Rs 14,500 crore-15,000 crore.

The Group, which operates in businesses from airports to energy, has taken these measures because of allegations made in the Hindenburg Study that a network of offshore shell companies located in tax havens was used to facilitate corruption, money laundering, and the theft of public funds by members of the Adani family. The firm called the report "bogus" and warned of legal action. During a video address last week, Gautam Adani claimed the company's finances were strong.

Since the allegations were published by Hindenburg on January 24, the value of the listed companies at one point decreased by around Rs 9.4 trillion ($114 billion), or approximately fifty percent.

Financial Times reported that as the shares continued to decline, Barclays notified Adani of a margin call for 50 percent of the loan in cash, according to persons speaking anonymously. Instead of posting funds against the loan, which did not mature until September 2024, the founder and his family of the Adani Group elected to repay it in full.

Adani has not disclosed the origin of the loan repayment payments.

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