Adani receives a $3.5 billion credit to restructure cement buyouts

 Adani receives a $3.5 billion credit to restructure cement buyouts

Mumbai: The Adani group said on Friday that it has secured a $3.5 billion debt restructuring agreement with a group of at least 10 international lenders to pay back the loans that the organization's founders had incurred to finance the $6.6 billion purchase of Ambuja Cements Ltd. and ACC Ltd.

The refinancing agreement, which has better conditions than the initial purchase loan, has a maximum duration of three years.

The refinancing cash will be used by Endeavour Trade and Investment Ltd, a special purpose business owned by the Adani group.

The organization estimates that the conditions of the refinancing might result in a $300 million savings over the expenses of the initial loan.

The biggest refinancing transaction in the cement sector, worth $3.7 billion, was signed by the Adani group and a group of banks on October 11th, according to Mint.

DBS Bank, First Abu Dhabi Bank, Mizuho Bank, and MUFG Bank are among the ten international banks involved in the refinancing transaction as required lead arrangers, bookrunners, and underwriters. Additional cooperative lenders include Barclays Bank Plc, BNP Paribas, Deutsche Bank AG, ING Bank, Sumitomo Mitsui Banking Corp., and Standard Chartered Bank.

In addition to lowering expenses for the firm, the refinancing agreement may increase its capacity for brownfield growth and raise its credit rating. This is consistent with its goal of surpassing Ultratech Cement Ltd, the only larger cement competitor, by doubling capacity from 70 million tonnes per year (mtpa) to 140 mtpa by the year 2027. The group's larger plan to gradually deleverage Adani's cement sector includes the most recent refinancing. According to a press statement from the firm, the leverage ratio for the cement industry's net debt to Ebitda is now under two times.

Adani Group purchased Ambuja Cements and ACC in August 2022 for about $6.5 billion, of which $2 billion was funded by stock and the other $6.5 billion by debt.

The bridging loan that the Adani group obtained from a group of 14 banks to buy the two cement firms resulted in a $4.5 billion debt commitment.

With the recently announced purchase of Sanghi Cement, the total installed production capacity of Ambuja Cements and ACC would increase to 100 mtpa by 2025.

The Adani Group said on Friday that ACC and Ambuja are now operating more efficiently. Operating income per tonne for the group's cement business increased from 340 in the quarter ending September 2022 (shortly after the purchase) to 1,253 as of the June quarter of current fiscal year.

Adani Group's legal advice for the transaction was Cyril Amarchand Mangaldas, Latham and Watkins, while the lenders' legal counsel was Allen & Overy LLP, Talwar Thakore and Associates.

Sanghi Industries Ltd., a cement manufacturer situated in Gujarat, was valued at 5,000 crore after Ambuja Cements purchased a 56.74% share in it in August. The most recent refinancing agreement could help the group's financial problems on a larger scale.

The total debt of the Adani Group was 2.27 trillion rupees as of March 31, while the cash position in the Group's books was above 60,000 crore.