India’s Adani Group has told bondholders it has access to a $3bn credit line from backers including at least one sovereign wealth fund, as it tries to assuage concerns about its financial health in the wake of a damaging short-seller report accusing it of fraud.
Adani representatives confirmed the existence of the credit line with a sovereign wealth fund during meetings with bondholders this week in Singapore and Hong Kong, according to three people who attended the meetings. Adani officials declined to name the sovereign fund, the people said.
The group is also in the process of arranging to borrow an extra $800mn under a credit facility that would be extended to Adani Green Energy, the conglomerate’s renewables arm, two of the people said. In response to a request for comment, the Adani Group said: “Anything outside of our disclosure is sheer speculation.”
Gautam Adani, one of the world’s richest men, has faced scrutiny since Hindenburg Research in January accused his conglomerate of engaging in stock price manipulation and accounting fraud. The Hindenburg report also drew attention to the group’s ballooning debt.
Since the short report, more than $143bn has been lopped off the market value of Adani’s listed companies. Those losses have already forced the group to repay a $1.1bn share-backed loan after facing a margin call on more than $500mn. The group also plans to repay remaining share-backed loans totalling almost $700mn in the coming weeks, two of the people at the meetings said.
The indebted power-to-ports conglomerate has consistently dismissed the claims of fraud and share price manipulation made in Hindenburg’s report but to little effect, with more than 60 per cent of the group’s market capitalisation wiped out amid sustained selling.
Top Adani executives have been meeting fund managers in Asia to address questions raised by the Hindenburg report. On Tuesday, Adani Group chief financial officer Jugeshinder “Robbie” Singh told Bloomberg News in an interview that “we have an obligation and duty to face and answer” investors.
Adani has stressed that its businesses, which include airports and logistics, have steady operating cash flows and can comfortably cover their debt obligations. “People are fairly convinced the operations [at Adani Group companies] are fine,” said one of the people who attended the meetings in Hong Kong.
Yet while few bondholders expect the group to default on any of its near-term obligations, yields on multiple Adani dollar bonds remain high.
On Wednesday, a $750mn bond from Adani Green Energy maturing in September 2024 was trading at about $0.80 on the dollar and carrying a yield of more than 18 per cent. A $650mn bond from Adani Ports maturing in July of next year was trading just above $0.90 on the dollar and yielding 10 per cent.
Nirgunan Tiruchelvam, Singapore-based head of consumer and internet at Aletheia Capital said that lenders and bondholders were likely to be using the Hindenburg crisis to push Adani to reduce its debt. “The power has swung towards the bondholders and the debt providers,” he said.
