Adani Says $2.15 Billion Share-Backed Loans Paid Off; Only Operating Co Liabilities Remain

Billionaire Gautam Adani-led promoter group has paid off all of the $2.15 billion loans taken pledging their shares in the conglomerate, and only debt at operating company level remains, Adani Group said seeking to assure investors of its ability to repay debt.

Adani Group in a statement termed reports of the group not completing repayment of $2.15 billion share-backed debt "baseless and deliberately mischievous.""Adani has completed full prepayment of margin linked share-backed financing aggregating to $2.15 billion (as was announced on March 12) and all corresponding shares pledged for those facilities have been released," it said. While "all share-backed facilities availed by the promoters have been paid off," residual pledges pertain to debt taken by operating companies, it said.

"After such repayment, pledge positions for Adani Green, Adani Ports, Adani Transmission and Adani Enterprises have reduced substantially, and only residual share pledges corresponding to Operating Company (OpCo) facilities remained outstanding," it said.

OpCo debts are availed by respective companies and are part of their existing debt structure, and no new OpCo facilities have been availed since the January 24 damning report of a US short-seller. The statement came after reports cited exchange filings showing banks not releasing a large portion of the promoters' shares held as collateral to suggest that the debt hasn't been fully paid off.

Adani said OpCo secured various facilities based on the security of project assets, project cash flow and other such collaterals. "In addition to such security, listed shares have been provided as additional collateral for these OpCo liabilities for additional lender comfort. Such facilities do not have covenants like cash margin calls, share price linked put option, etc. which exist in share backed financing."

The conglomerate said it had on February 6 stated that it had repaid $1.114 billion of loan, followed by prepayment of $134 million subsequently. On March 7, it had said Rs 7,374 crore ($902 million) had been repaid. The consolidated number of $2.15 billion was released on March 12.

That followed founder and chairman Gautam Adani on March 2 selling shares worth $1.87 billion in flagship incubating firm Adani Enterprises Ltd, Adani Ports and Special Economic Zone Ltd, Adani Transmission and Adani Green Energy Ltd (AGEL) to GQG Partners in an attempt to turn the narrative building since the release of the Hindenburg Research report.

The 10 listed Adani Group companies, which together had lost about $ 135 billion in market value following the report, saw stocks recover some of the lost ground after that. In September last year, CreditSights, a Fitch Group unit, had said that the group was "deeply overleveraged" as it used debt to expand an empire centred on ports and coal mining to include airports, data centres and cement as well as green energy.

In the January 24 report, Hindenburg flagged "substantial" debt levels at the group while alleging accounting fraud and the use of offshore shell companies to inflate stock prices. The group denied all Hindenburg allegations, calling them "malicious", "baseless" and a "calculated attack on India". Adani Group has been hoping to claw back the narrative by choosing slow and steady growth over the breakneck, mostly debt-fuelled, expansion spree of recent years.

It has already scrapped a Rs 7,000-crore coal plant purchase, decided not to bid for a stake in state-backed energy trading firm PTC, reined in expenses, repaid some debt and promised to repay more. Adani Group's gross debt has doubled in the last four years. It has almost $2 billion worth of foreign-currency bonds coming up for repayment in 2024, according to its regulatory filing.

The group's gross debt has grown from Rs 1.11 lakh crore in 2019 to Rs 2.21 lakh crore in 2023, according to a presentation made to investors last month. After including cash, the net debt was Rs 1.89 lakh crore in 2023.