Indian group tells bondholders that it wants to borrow $800mn more for its renewables arm and Kaye Wiggins Hong Kong Mercedes Ruehl Singapore Chloe Cornish Mumbai
India’s Adani Group told bondholders that it has access to a credit line of $3 billion from backers, including at least one sovereign wealth funds. This is in an effort to calm financial concerns following a negative short seller report that accused it of fraud.
Three people who were present at the meeting said that Adani representatives confirmed that the credit line was established with a sovereign wealth funds during meetings with bondholders in Singapore and Hong Kong this week. The people claimed that Adani officials refused to identify the sovereign fund.
Two people confirmed that the group is in the process to arrange to borrow $800mn more under a credit facility. This would be extended Adani Green Energy’s renewables arm. The Adani Group responded to a request for comment. “Anything beyond our disclosure is pure speculation.”
Since January Hindenburg Research , Gautam Adani has been under scrutiny. He was accused by his conglomerate of stock price manipulation and accounting fraud. Hindenburg’s report also brought attention to the group’s growing debt.
More than $143bn has been taken off Adani’s listed companies’ market values since the report was written. After being subject to a margin call of more than $500mn, those losses have forced Adani’s group to repay a $1.1bn loan share-backed. Two people present at the meeting said that the group plans to repay any remaining share-backed loans amounting to almost $700mn over the next weeks.
Indebted power to-ports conglomerate Hindenburg has repeatedly denied the allegations of fraud and manipulation of share prices made in Hindenburg’s report. However, this was of little consequence as more than 60% of the group’s market capitalisation was wiped out by sustained selling.
Adani executives met with fund managers in Asia on Tuesday to discuss the Hindenburg report. Jugeshinder Singh, chief financial officer of Adani Group, stated in an interview with Bloomberg News that “we have an obligation to face and answer investors”.
Adani stressed that its businesses which include logistics and airports, have stable operating cash flows and are able to comfortably pay their debt obligations. One of those who attended the meeting in Hong Kong said that “people are pretty convinced the operations [at Adani Group businesses] are fine.”
However, while many bondholders don’t expect the group will default on its short-term obligations in the near future, multiple Adani Dollar bonds still offer high yields.
Adani Green Energy’s $750mn bond, due to mature in September 2024, was traded at $0.80 per dollar on Wednesday. It yielded more than 18%. Adani Ports’ $650mn bond, due to mature in July 2020, was just above $0.90 per dollar and yielded 10%.
Aletheia Capital’s Singapore-based head for consumer and internet, Nirgunan Tiruchelvam said that bondholders and lenders were likely to use the Hindenburg crisis as leverage to force Adani to reduce its debt. He stated that “the power has swung toward the bondholders, and the debt providers.”