Adani seeks $2.5B loan to refinance Ambuja, ACC acquisition debt
What's the story
The Adani Group is in talks with a consortium of international banks, including MUFG, Barclays Bank, and Sumitomo Mitsui Banking Corporation (SMBC), to raise a $2.5 billion loan facility. The move is aimed at refinancing the debt incurred during its 2022 acquisition of Ambuja Cements and ACC. The proposed facility will replace an earlier refinancing deal completed in October 2023 when Adani Cement raised $3.5 billion from 10 international banks through Endeavour Trade and Investment Ltd.
Domestic sale
New loan facility will also be sold to domestic banks
Part of the new loan facility will also be sold to domestic banks, under the Reserve Bank of India's (RBI) acquisition-finance framework.
The refinancing effort comes after a series of major US legal proceedings involving the Adani Group and its top executives were resolved.
On August 10, a New York federal court dismissed with prejudice securities and wire-fraud charges against Gautam Adani and Sagar Adani at the request of the justice department.
SEC settlement
US legal battles for Adanis settled
Along with the court's ruling, Gautam and Sagar also settled a related civil case with the US Securities and Exchange Commission (SEC).
They agreed to pay penalties of $6 million and $12 million, respectively, without admitting or denying the allegations.
In May, Adani Enterprises had also agreed to pay $275 million to settle potential civil liability over apparent violations of US sanctions on Iran linked to liquefied petroleum gas purchases.
Acquisition details
Acquisition of Holcim's stakes in Ambuja and ACC
In September 2022, the Adani family completed the purchase of Holcim's stakes in Ambuja and ACC through Endeavour, a special purpose vehicle.
The group valued the stakes and open offer consideration at $6.5 billion.
The transaction gave Adani a 63.15% stake in Ambuja and a 56.69% interest in ACC, making it India's second-largest cement producer after Ultratech, owned by Aditya Birla Group.
Expansion strategy
Ambuja announced expansion plans recently
On November 2, Ambuja announced plans to add some 30 million tons of annual cement capacity across eastern, western, and northern India.
The company outlined a ₹14,500 crore growth capital expenditure program.
Despite the industry's margin pressures due to high fuel and logistics costs, Ambuja reported consolidated revenue of ₹9,197 crore for the September quarter.
This was marginally higher than last year's ₹9,175 crore during the same period.