Adani Group on Monday made a bold move to prepay loans backed by pledged shares across group companies Adani Green, Adani Transmission, and Adani Ports, even as the group’s shares keep hammered in the aftermath of Hindenburg research report. Adani Green said that the group promoters have posted as much as $1.1 billion of amount towards prepayment of share backed facility ahead of its maturity of September 2024, according to Reuters. Adani group has released 12% of promoter holding in Adani Ports; 3% of promoter holding in Adani Green; and 1.4% of promoter holding in Adani Transmission.
Earlier today, Reuters reported citing a spokesperson that Adani group is in talks to prepay all loans backed by pledged shares. In the report, the spokesperson denied media reports that said the conglomerate was planning to cut back its capital spending. “False report, on the contrary, Adani Group is moving to prepay all LAS (Loans Against Shares) finance,” a spokesperson for the group said in an emailed statement to Reuters.
Note that Adani Enterprises and its subsidiary companies have reportedly taken out unsecured loans totalling Rs 11,574 crore, which are now at risk of being recalled by banks and financial institutions. While there has been no material change in the conglomerate’s financial performance, the recent allegations made by short-seller Hindenburg Research have led to a significant change in the market’s perception of the Adani Group companies. The total market capitalisation of the nine Adani group listed companies, including Ambuja and ACC Cement, has eroded by almost half to $120 billion in around seven days.
In the aftermath of the Hinderberg report, Adani group recently withdrew its Rs 20,000 crore follow-on-public offer (FPO), which was partially paid and fully subscribed by non-retail investors. This decision has created new challenges, especially in mobilising additional resources. According to a disclosure to investors, the company had stated in its FPO document that “these loans may not be repayable in accordance with any agreed repayment schedule and may be recalled by the lender at any time.”
The company had disclosed this information as one of the risk factors saying, “In the event that the lender seeks repayment of any such unsecured loan, our company and our subsidiaries would need to find alternative sources of financing, which may not be available on commercially reasonable terms, or at all. As a result, any such demand may materially and adversely affect our business, cash flows, financial condition and results of operations,” it stated.