New Delhi: The Adani Group is likely to drop plans to raise about $500 million via overseas bonds, the Economic Times reported, adding that it will explore other options to refinance the first tranche of $4.5 billion (around Rs 37,000 crore) loans it took from global banks to buy ACC and Ambuja Cements last year.
The deal made Adani Group the second largest cement producer in India, after Aditya Birla Group’s UltraTech Cement.
The other options to refinance the debt include using internal reserves, a person with knowledge of the matter told the newspaper.
Adani had raised the debt last year from 14 international lenders, including Standard Chartered Plc, Deutsche Bank AG and Barclays Plc.
In September last year, Mint reported that Gautam Adani pledged his entire stake in Ambuja Cements and ACC, worth as much as $12.5 billion, to foreign banks to fund the $6.5 billion acquisition of the two cement makers.
However, days after the Adani stock rout halved the group’s market value by more than $100 billion, and subsequent concerns over the firm’s debt levels, the company said that it has not pledged any shares of Ambuja Cements and ACC to refinance the two assets. The group said that it had acquired Ambuja and ACC for Rs 51,825 crore, of which 69% (Rs 35,885 crore) was financed through foreign borrowings.
Sources in the know of the matter also told the business daily that the conglomerate is in discussions with its lenders who have lent against shares of the company, and has communicated that it will provide additional securities, if required, in the form of additional cash buffer.
At the same time, it is also looking to pre-pay smaller ticket loans, the report said.
For example, a $37 million interest payment, on the $500 million facility, due in March is likely to be settled in cash first, said people familiar with the company’s plans, the report added.
Although the company hasn’t faced margin calls on these pledges, it has communicated to its lenders it is seeking prepayment proactively, one of the persons familiar with the plans of the group told the newspaper.
A margin call occurs when a margin account runs low on funds, usually when the securities in the account decrease in value because of a losing trade. Margin calls are demands for additional capital or securities to bring a margin account up to the maintenance requirement.