Adani Group begins USD 130 mn debt buyback, first since Hindenburg report

NEW DELHI:  Billionaire Gautam Adani promoted Adani Ports & Special Economic Zone (APSEZ) is buying back outstanding 3.375 per cent senior notes due in 2024 for a cash consideration of $130 million. The country’s largest private port operator will fund the payment through cash reserves available with the company.

Senior notes are more secure than the other forms of debt as they are required to be repaid before if the issuer declares bankruptcy. According to the company, the purpose of the tender offer is to partly prepay its near-term debt maturities and to convey the comfortable liquidity position of the firm.

This is the first time the port-to-power conglomerate is buying back bonds since the Hindenburg report published in January. Adani had earlier paid back $2.65 billion of share-backed loans by mid-March to boost confidence among investors amid concerns of being ‘over-leveraged’. 

The group’s 10-listed stocks have lost over $100 billion in market value after the January 24 report by US-based short-seller Hindenburg Research accused them of stock price manipulation via improper use of offshore tax havens. The group has denied all allegations. 

APSEZ said it plans to buy back $130 million of the 3.375 per cent senior notes in each of the next four quarters as it tries to show its comfortable liquidity position. “After the successful completion of this tender offer, the company expects $520,000,000 ($530 million) notes to remain outstanding (“Outstanding Notes”). Post this tender offer, the company intends to offer to purchase for cash nearly $130,000,000 ($130 million) of the outstanding notes in each of the next four quarters,” said APSEZ in a regulatory filing. 

It added that the company may choose to either accelerate or defer this plan subject to its own liquidity position and the market conditions and further subject to the terms, including pricing, to be separately announced for each of such tranches. As per reports, the embattled Adani Group’s gross debt was Rs 2.27 lakh crore as of March 31, 2023, and the Group is likely to avoid taking additional debt until it lowers the current level. 

Tender offer to partly prepay near-term debt maturities

As per the company, the purpose of the tender offer is to partly prepay its near-term debt maturities and to convey a comfortable liquidity position. This is the first time the port-to-power conglomerate is buying back bonds since the Hindenburg report published in January