Adani to prepay US$500 million loan as banks baulk at refinancing

THE Adani Group plans to prepay a US$500 million bridge loan due next month after some banks baulked at refinancing the debt following a short seller attack that sent the group’s assets tumbling.

Barclays, Standard Chartered and Deutsche Bank are among the banks that lent Adani US$4.5 billion to finance the purchase of Holcim cement assets last year. A portion of that loan is due Mar 9.

The lenders were in talks to refinance the loan up to a week before the critical report from Hindenburg Research was published, according to people familiar with the matter. Those talks stalled after the report alleging fraud led to a massive selloff, the people said, asking not to be identified discussing a private matter.

An Adani spokesperson said the conglomerate had been in talks with the banks to refinance part of the loan but the group plans to prepay it. The spokesperson said discussions with the banks have not stalled. Representatives for Barclays and Deutsche Bank declined to comment. A representative for Standard Chartered wasn’t immediately available.

This marks the second time in a week that the group has taken steps to prepay debt as it fights to regain investor confidence and stem the stock rout. Billionaire Gautam Adani and his family have prepaid US$1.11 billion worth of borrowings backed by shares, the group said on Monday (Feb 6).

Adani faced a margin call of more than US$500 million on that loan, prompting the Indian tycoon to repay the whole debt, Financial Times reported on Wednesday. The Adani Group said it didn’t receive a formal request for a margin call and that the loan was repaid early “per our prepayment planning”, the paper reported.

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Global banks are ramping up their scrutiny of the group following the Hindenburg report. Citigroup’s wealth arm has stopped accepting Adani securities as collateral for margin loans, following a similar move by Credit Suisse Group.

The corporate empire of Adani, once the world’s second-richest person, has been thrown into a tailspin after the Hindenburg report on alleged malpractices. Ten Adani group companies including Adani Total Gas, Adani Enterprises and Adani Transmission at one point erased US$117 billion from their combined market value in the selloff.

Short report

Hindenburg alleged that a web of Adani-family controlled offshore shell entities in tax havens were used to facilitate corruption, money laundering and taxpayer theft. The conglomerate has called the report “bogus”, and threatened legal action. Adani gave a video speech last week stating that the group’s balance sheet is healthy.

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Adani Group’s shares have rallied this week after the debt payment and as traders covered short positions. Seven of the group’s 10 stocks were up in Wednesday’s session, with flagship Adani Enterprises rallying 20 per cent after surging the most since 2020 the previous day. The stock has more than doubled from the low it hit during the recent selloff. BLOOMBERG