Adani Group stocks slumped Tuesday as media reports renewed concerns over the ports-to-power conglomerate’s ability to repay its debt.
(Bloomberg) — Adani Group stocks slumped Tuesday as media reports renewed concerns over the ports-to-power conglomerate’s ability to repay its debt.
Adani Ports & Special Economic Zone Ltd. fell 5.7% to close at 593.40 rupees — lower than the price GQG Partners paid to buy a stake earlier this month — after plummeting more than 9% earlier in the session. The sharp selloff in all Adani stocks erased about $6.2 billion from their combined market value, the biggest decline since early February.
The group is seeking to renegotiate the terms of $4 billion worth of loans, the Economic Times newspaper reported, citing people it didn’t identify. Separately, The Ken flagged concerns over the repayment of $2.15 billion of share-backed loans by Adani Group, saying regulatory filings examined by it showed that banks have not yet released a large portion of its founder’s shares.
The reports revive concerns about the indebted group’s access to funds, which were brought to the fore following allegations of fraud by US short seller Hindenburg Research in January. Indian bourses asked the group’s flagship firm to clarify on media reports related to the repayment of the debt by its founders that led to a plunge in stock prices.
Billionaire Gautam Adani had been seeking to reassure investors with roadshows, selling stock in four companies to GQG partners, loan repayments and plans to cut spending. The group has started talks with lenders to extend the tenor of its $3 billion bridge loan to a period of five years or beyond from the existing 18 months, according to the Economic Times. It’s also seeking to increase the maturity of another $1 billion mezzanine loan, the report said.
Losses Mount
Flagship Adani Enterprises Ltd. was the worst performer among the 10 stocks related to the group as it fell about 7% to close at its lowest since early March. Some other group companies, including Adani Green Energy Ltd., Adani Power Ltd., and Adani Wilmar Ltd., all declined by a 5% daily limit. Cement unit ACC Ltd. lost 4.2%, while Ambuja Cements Ltd. dropped 3%.
Twelve of the 15 dollar-denominated bonds from Adani group companies also fell as of 3:33 pm in Hong Kong. The Feb. 2031 notes issued by Adani International Container Terminal lost 0.7 cents on the dollar to 75.48 cents, and Adani Ports’ Feb. 2031 bonds slipped 0.6 cents.
An Adani Group spokesperson called the Economic Times report “baseless speculation,” in an emailed statement. While the statement didn’t mention The Ken’s report, spokesman Jugeshinder Singh tweeted to call it a “deliberate misrepresentation.”
“The Ken report increases the risks,” for the group in refinancing, Sameer Kalra, founder of Target Investing, said by phone. “The global banking crisis has resulted in a tightening of liquidity and the cost of it.”
S&P Global Ratings earlier in the month said that downside risks to its rating on Adani group entities include restricted access to funding, slip ups in corporate governance, a probe uncovering “serious wrongdoing” or previously undisclosed related-party loans, cash leakages, or misreporting.
–With assistance from Abhishek Vishnoi, Beth Thomas, P R Sanjai, Muneeza Naqvi and Abhay Singh.
(Updates with comment from Adani spokesperson in the eighth paragraf)
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