Adani Cement has refinanced a $3.5 billion loan taken for the acquisition of ACC and Ambuja Cements, in another sign of rising support for the conglomerate from lending institutions and investors.
In September 2022, Gautam Adani through Endeavour Trade and Investment Ltd, a special purpose vehicle, completed the acquisition of Holcim India’s arms — Ambuja Cements Ltd and ACC Ltd.
The transaction involved the acquisition of Holcim’s stake in Ambuja and ACC along with an open offer to the shareholders of both the companies.
The Holcim stake and the open offer consideration for Ambuja Cements and ACC were valued at $6.50 billion, which then made it the largest-ever acquisition by Adani and also India’s top M&A transaction in the infrastructure and materials space.
The transaction had included Holcim’s 63.11 per cent stake in Ambuja Cements, which owned a 50.05 per cent interest in ACC, and Holcim’s 4.48 per cent direct stake in ACC.
A statement from Adani Cement on Friday said it has completed the refinancing programme for the debt taken for the two companies through a financing package from a clutch of international banks.
The refinance will lead to cost savings of $300 million. As many as 10 international banks participated in the facility.
“The re-financing program of $3.5 billion has been concluded with a clutch of international banks with debt maturity of up to 3 years, testifies to the strong support and access to capital, supplementing the solid capital prudency adopted at all portfolio companies,” Adani Cement said.
“This showcases Adani’s robust access to the global financial market and strong liquidity position. This achievement reflects our commitment to financial stability and growth,’’ it said.
According to the company, the $3.5 billion refinance marks the continued execution of the capital management plan outlined in September 2022 that will see step-wise planned deleveraging of Adani Cement, with cement vertical net debt to EBITDA (earnings before interest, tax, depreciation & amortisation) now under two times.
``These along with the benefit from synergies with the integrated Adani infrastructure platform, especially in the areas of raw material, renewable power and logistics, where Adani portfolio companies have vast experience and deep expertise have resulted in improvement in the EBITDA per tonne from Rs 340 per tonne in the quarter ended September 2022 (immediately after the acquisition) to Rs 1,253 a tonne in the quarter ending June 23 which represents embedded deleveraging through elevated coverage positioning,” it said.
Ambuja Cement and ACC have a combined installed production capacity of 67 million tonnes (mt) per annum which will go up to 100 mt by 2025 with the acquisition of Sanghi Cement. The group is the second largest cement maker after Kumar Manglam Birla-led UltraTech Cement.
Adani Cement said that the transaction was financed by facilities aggregating to $3.5 billion from 10 international banks.
DBS Bank, First Abu Dhabi Bank, Mizuho Bank and MUFG Bank acted as mandated lead arrangers and bookrunners and underwriters to the transaction.
In addition, Barclays Bank plc, BNP Paribas, Deutsche Bank AG, ING Bank, Sumitomo Mitsui Banking Corporation and Standard Chartered Bank acted as mandated lead arrangers and bookrunners for the transaction.
