Two folks with direct information of the matter confirmed this, including the transfer is not going to solely assist Adani Group repay your complete mortgage taken for buying Ambuja Cements Ltd and ACC Ltd, however can also cut back the group’s value of capital. The consortium contains Deutsche Financial institution AG, Customary Chartered Financial institution plc, Barclays plc, Citibank NA, MUFG Financial institution Ltd, Sumitomo Mitsui Banking Corp and different lenders, the 2 folks stated.
The refinance deal could improve the group’s credit standing and strengthen its capacity to accumulate different cement corporations, in sync with the group’s ambition to beat Ultratech Cement Ltd to turn out to be the nation’s largest cement maker doubling its capability to 140 mtpa by 2027.
It is a key a part of the revived capex plan at Adani Group which, earlier this 12 months, suffered a $150 billion wealth wipe-out at one level following a adverse report by US-based short-seller Hindenburg Analysis on 24 January.
On 13 September, Bloomberg reported that the Adani Group is in talks with banks to refinance debt taken on to fund its buy of Ambuja Cements Ltd, with lenders divided into three classes in what might be certainly one of Asia’s largest syndicated mortgage offers of the 12 months.
In August 2022, Adani Group acquired Ambuja Cements and ACC for $6.5 billion, of which $2 billion was financed by way of fairness.
A $4.5 billion debt obligation arose out of the bridge mortgage that was secured by the Adani Group from a consortium of 14 banks to accumulate the 2 cement firms.
“Of this, no less than $700 million has already been repaid by the promoters,” one of many two folks stated on situation of anonymity.
In line with the 2 folks, aside from the 14 present banks, no less than six new international banks have joined to type the 20-member consortium.
Spokespersons from Deutsche Financial institution, Customary Chartered Financial institution, Citibank NA and Barclays declined to touch upon the refinance deal.
“For the reason that fee of curiosity is decrease, the most recent refinance deal will cut back the group’s value of capital,” stated the primary particular person. “The bridge mortgage for the acquisition was availed for a tenure of 18-24 months at an rate of interest of as much as 6.5%. The newest $3.7 billion refinance deal, which is supposed to repay the bridge mortgage, might be availed at a decrease rate of interest of 6.24%,” stated the primary particular person, including the decrease curiosity value is not going to solely improve the credit standing but additionally save round ₹2,500 crore for Adani’s cement corporations yearly.
“The tenure of the refinance might be 36 months,” stated the primary particular person.
Alongside, Ambuja Cements and ACC collectively generate round $1 billion in money yearly.
“These two components collectively will assist Adani Group in its mega-inorganic progress plan,” stated the primary particular person.
In August, Adani Group-owned Ambuja Cements acquired a 56.74% stake in Gujarat-based cement-maker Sanghi Industries Ltd, valuing the latter at ₹5,000 crore. “After the refinance deal, Adani Group could purchase one other mid-size cement-making agency within the subsequent six-nine months which can improve the present capability of its cements enterprise to shut to 100mtpa,” stated the primary particular person.
On 4 October, a report by The Hindu Enterprise Line stated Adani Cement could be a part of the race together with Parth Jindal-led JSW Cement to accumulate Heidelberg Cement India, which has a capability of 14 mtpa.
JP Morgan India Pvt. Ltd on 2 August stated in a report that Adani has estimated a 17% gross sales quantity CAGR within the 2023-28 interval.
“Whereas the imaginative and prescient and progress targets are spectacular, the discount in money balances at ACC-Ambuja Cements, and the acquisition debt on the guardian holding firm, signifies that how ACC-Ambuja Cements would fund the aggressive capex must be seen,” the report stated.
For the reason that newest refinance deal will carry a big a part of Adani group’s total debt beneath a decrease fee regime, the group’s total credit-worthiness and the leverage ratio could enhance, stated the second particular person, including that no less than 40% of the cement manufacturing course of by Ambuja Cements and ACC might be ESG compliant and non-clinker dependent, which can additional improve the 2 cement corporations’ credit standing. “….the big order placement (by Ambuja Cements) is a optimistic signal and highlights the seriousness of Ambuja Cement’s capability plans,” stated JP Morgan.
As of 31 March, 2023, Adani Group’s gross debt stood at and money place within the ebook was at over ₹60,000 crore.
An MUFG spokesperson declined to remark.
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Up to date: 11 Oct 2023, 10:49 PM IST
