Adani Group pledges more shares as loan securities

Adani Group pledges more shares as loan securities

An additional 0.99 per cent of Adani Green Energy Ltd. shares were pledged “for the benefits of the lenders” by SBICap Trustee, according to notices to stock exchanges.

According to a trustee, further shares of the troubled Adani Group’s companies have been pledged as security for debts obtained by the group’s flagship company. In notices to stock exchanges, SBICap Trustee stated that an additional 0.99 per cent of shares in Adani Green Energy Ltd. were pledged for the benefit of Adani Enterprises Ltd.’s lenders. According to the trustee, banks also received 0.76 per cent more shares of Adani Transmission Ltd.

With the most recent promise, 2% of the group’s renewable energy firm, Adani Green Energy Ltd, had all of its shares pledged to SBICap. The percentage in the case of Adani Transmission was 1.32 per cent.

The promise was established the day after the Adani Group announced on March 7 that it had returned loans totalling Rs 7,374 crore (more than USD 900 million) that were taken pledging shares in four Group Companies in an effort to assuage investor concerns over leverage and debt.

Adani Group pledges more shares as loan securities
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Repayment of debt released the pledge on 31 million shares, or 4% of the promoters’ holding in Adani Enterprises Ltd., 155 million shares (11.8 % of the promoters’ stake) in Adani Ports & Special Economic Zone Ltd. (APSEZ), 36 million shares (4.5 % of the promoters’ holding in Adani Transmission Ltd.), and more than 11 million shares, or 1.2 % of the promoters’ holding in Adani Green Energy Ltd.

The group had stated in a statement on March 7 that the payback would relieve the promise on the promoters’ shares in four group companies and that when combined with earlier repayments, the group has prepaid USD 2.016 billion in share-backed financing. The loan repayments came shortly after the promoters sold minority holdings in four publicly traded firms to US-based GQG Partners for Rs 15,446 crore; however, Adani Group has not specified the source of funding.

The sale of shares in the founding chairman Gautam Adani’s company Adani Enterprises Ltd (AEL), the port company Adani Ports and Special Economic Zone Ltd (APSEZ), the electricity transmission company Adani Transmission Ltd (AEL), and the renewable energy company Adani Green Energy Ltd was announced on March 2 on behalf of the SB Adani Family Trust (AGEL). The firm was able to change the narrative after American short-seller Hindenburg Research published a critical report on January 24 thanks to that sale.

Since the report, the ten listed Adani Group firms, which had collectively lost roughly USD 135 billion in market value, have seen their stock prices rebound in subsequent trading sessions. CreditSights, a division of Fitch Group, declared the company “seriously overleveraged” in September of last year as it utilised debt to build an empire centred on ports and coal mining but also included airports, data centres, cement, and green energy.

The organisation has “significant” debt levels, according to the January 24 report from US short-seller Hindenburg Research, which also accuses the company of accounting fraud and using offshore shell companies to raise stock values artificially. The group has refuted all claims related to the Disaster and described the conduct of the organisation as an intentional attack on India and her people.

By choosing moderate, steady growth over the recent years’ frantic, largely debt-fueled expansion frenzy, it seeks to change the narrative. It has already cancelled plans to buy a Rs 7,000 crore coal plant, declined to compete for a stake in the state-backed energy trading company PTC, cut costs, repaid some debt, and committed to repaying more.

In the previous four years, the overall debt of the Adani Group has increased. In 2024, it will have to repay bonds in foreign currencies for over USD 2 billion. According to a presentation provided to investors last month, the group’s gross debt will increase from Rs 1.11 lakh crore in 2019 to Rs 2.21 lakh crore in 2023. The net debt after including cash in 2023 was Rs 1.89 lakh crore.

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