Adani Group Executives Plan to Refinance Debt with Private Placement Notes and Cash from Operations
Executives from the Adani Group have announced plans to address looming debt repayment deadlines with a variety of options, including private placement notes and cash from operations. During a recent investor call, the management team revealed their plan to refinance Adani Green Energy Ltd.’s bonds, which are due in 2024, by the end of June. The comments have caused the bonds to rally significantly.
According to anonymous sources cited by Bloomberg, the debt will likely be refinanced using long-term private placement notes with a potential maturity of up to 15 years. The Adani Group has previously denied facing any material refinancing risks or near-term liquidity requirements.
During the call, the management team also expressed their intention to reduce the group’s net debt to below three times EBITDA next year, down from the current 3.2 times. They announced plans to repay $390 million of debt due over the next 12 months at the Adani Transmission Step-One Ltd level using cash from operations.
These announcements come at a time when investors are scrutinizing the Adani Group’s finances following accusations of fraud and market manipulation by Hindenburg Research. The conglomerate, which has interests in renewable energy and ports, has raised over $8 billion worth of US currency bonds in international markets in recent years. It has also taken out foreign-currency loans in amounts similar to the bonds.
The Hindenburg report caused a spike in yields, leading some investors and analysts to express concerns about the prohibitively high debt financing costs for new bond deals. Adani Green Energy notes are currently priced at around 86 cents on the dollar, with an increase of about eight points following the refinancing news from the call, according to CBBT pricing compiled by Bloomberg.
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