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Adani Group has obtained $3.5 billion from ten global banks to restructure debt to acquire Ambuja Cements and ACC, indicating that the business has moved on from the Hindenburg crisis. The refinancing will result in an overall cost saving of $300 million for Adani Cement, a company statement said after the Adani corruption case. Through Endeavour Trade and Investment, Adani Cement has entered into definitive agreements” for the facility,” the company said on 20th October 2023.
The company stated that the deal among the top 10 biggest loans in Asia this year was concluded with a group of 10 international banks with debt maturity of up to 3 years.
The transaction, which would be among the top 10 biggest loans in Asia this year, might be completed soon
According to a person familiar with the subject, who requested not to be identified because the matter is private, the agreement, which would be among Asia’s top ten largest loans this year, might be finalised this week. They estimated the loan would be priced at 450-500 basis points over the benchmark secured overnight finance rate. The arrangement will have three tenors: six months, eighteen months, and three years.
The funding comes after months of discussions with banks and the aftermath of fraud claims by US short-seller Hindenburg Research, which caused the company’s bonds and shares to plummet earlier in 2023. Adani has categorically refuted the allegations in the Adani corruption case. In July 2023, the group’s flagship enterprise raised 12.5 billion rupees ($151 million) by selling local-currency bonds to refute the Hindenburg claims.
Adani Cement has engaged in formal agreements via Endeavour Trade and Investment Limited
Strong underlying business reflected in global financial institutions’ unshakable confidence in the Adani corruption case:
- Through Endeavour Trade and Investment Ltd, Adani Cement has entered into formal agreements for a new USD 3,500 million loan to refinance the debt incurred in acquiring Ambuja and ACC.
- The USD 3,500 million refinancing programme, completed with a group of international banks, demonstrates the strong backing and availability of cash, reinforcing the good capital prudence implemented by all portfolio firms.
- The transaction reflects Ambuja and ACC’s outstanding underlying performance, with EBITDA / Tonne increasing from INR 340/T in the quarter ending September 22 (immediately after the acquisition) to 1,253/T ending June 23.
Adani Cement is India’s second biggest cement producer, having completed the USD 6.6 billion acquisition of Ambuja and ACC (two of India’s iconic brands) on September 22, the largest transaction in the infrastructure and materials market. The USD 3.5 billion facility continues the capital management strategy stated in September 2022, which will see Adani Cement deleveraging in stages. The cement vertical’s net debt to EBITDA ratio is less than two times.
Ambuja Cements and ACC now have a total installed production capacity of 67 MTPA, which will be increased to 100 MTPA with the announced acquisition of Sanghi Cement by 2025. ACC and Ambuja are among the strongest brands in India, with an immense depth of manufacturing and supply chain infrastructure. These, combined with synergies with the integrated Adani infrastructure platform, particularly in the areas of:
- Raw materials
- Renewable power, and
- Logistics
Here, the Adani Portfolio companies have vast experience and deep expertise that has resulted in an increase in EBITDA / Tonne from INR 340 / Tonne in the quarter ending September 22 (immediately after the acquisition).
Adani Group intends to acquire Jaypee Cement for around $500 million
- Adani Group will acquire Jaypee Cement for around $500 million.
- The purchase of Jaypee Cement is part of Adani Group’s objective of becoming India’s leading cement maker by 2030.
- Adani Group chairman Gautam Adani plans to quadruple the company’s manufacturing capacity over the next five years.
After acquiring ACC Limited and Ambuja Cement for a combined $6.5 billion in 2022, Adani Group plans to purchase Jaypee Cement, another rival in the cement market in India. Adani Group’s acquisition of Jaypee Cement would allow it to enhance its production capacity in Madhya Pradesh (MP), Uttar Pradesh (UP), Andhra Pradesh (AP), and Karnataka to roughly 10 million tonnes per year (MTPA). After UltraTech Cement, Adani Group is India’s second-largest cement maker.
This acquisition may offer Adani Group a competitive edge in the Indian market by increasing manufacturing capacity. Advances in Indian infrastructure are likely to expand the scale of the cement sector in the coming years. The cement industry’s market size is expected to increase from $28.09 billion in 2021 to $44.70 billion by 2026. The cement market saw a major decrease in 2020 due to the COVID-19 pandemic’s shutdown and travel restrictions.
However, the market is rebounding and is expected to develop steadily over the next few years. Several businesses are developing plans to capitalise on rising market possibilities and achieve a larger market share, resulting in increased rivalry in the cement sector. These Group missions demonstrate that the Adani corruption allegation is a compilation of counterfeit facts.
