The Adani group securities are caught between the devil and the deep blue sea — even as their shares took a severe beating, the bonds are getting hammered on the global markets.
The selling which commenced last Wednesday following the damaging report of Hindenburg Research is not showing any signs of slowing down, with the prices of debt securities reportedly hitting multi-year lows.
The Adanis have already organised a conference call to allay the fears of the bond holders. Hindenburg Research has already taken short positions in Adani group companies “through US-traded bonds and non-Indian traded derivative instruments”.
A Bloomberg report said the 2027 dollar-denominated note of Adani Ports & Special Economic Zone dropped 7.1 cents on the dollar to 72 cents in Hong Kong on Monday. The prices of at least eight other debt securities dropped more than two cents, leading to their market value dropping more than hundreds of million dollars in less than a week.
A Bernstein note said close to $2.4 billion bonds of four group firms will mature in 2024, which could pose a challenge since overseas yields are likely to remain high.
In 2023, the group will have to pay $289 million worth of dollar note coupon, with the first deadline on Thursday, when Adani Ports and Special Economic Zone Ltd will pay a combined $24.7 million of interest for three bonds.
With doubts persisting on its ability to make the immediate payments, the proceeds of the follow-on-offer (FPO) of Adani Enterprises that close on Tuesday may come in handy to Adani. The group had said it would keep aside Rs 4,165 crore from the Rs 20,000-crore expected proceeds from the FPO to repay the debt taken by its airports, road and solar project subsidiaries.
If the offer fails, the repayment plans could take a hit.
The group reportedly has total debt of $30 billion of which cash reserves stand at $4 billion, making the net debt at around $26 billion.
Observers said the developments in both the bond and equities have the potential of hitting the fund-raising plans of the conglomerate, unless there is a turnaround in sentiment. The FPO could gather only 3 per cent subscription till Monday.
Margin calls
Markets fear the falling stock prices of the group companies may lead to margin calls on the shares that are pledged by the promoters.
Sources close to the group to whom the Telegraph spoke said they do not anticipate any margin calls.
Speculations were rife Ambuja Cements may trigger margin calls, but group CFO Jugeshinder Singh clarified on Monday the Adanis have not pledged any shares of the company. Singh said due to the strict rules of Sebi, they have been considered as an encumbrance.
New Backers
Monday brought mixed news to the Adanis with most of its share prices coming under pressure, even as Abu Dhabi’s International Holding Company said it would invest Rs 3,260 crore in FPO.
IHC said it was confident in the fundamentals of the conglomerate. IHC is led by Sheikh Tahnoon Bin Zayed Al Nahyan — the UAE’s national security adviser and brother to the president.
Singapore’s Temasek Holdings (Private) Limited have reportedly said that it remains invested in Adani Ports and Special Economic Zone.
Temasek “remains invested in Adani Ports, as per their latest public shareholding disclosures”, The Straits Times reported on Monday, citing a spokesperson for the 49-yearold state-owned investor. Temasek, through its subsidiary Camas Investments, owns just over 1.2 per cent in Adani Ports. The stake was acquired in 2018 for Singapore $147 million.