Adani group prepays loans worth $1.114 billion

The promoters of Adani group prepaid loans worth nearly $1.114 billion to get some of the pledged shares released. The pledged shares pertain to Adani Ports, Adani Transmission and Adani Green. During the recent price fall, the situation had been aggravated by pledged shares as collateral levels went below the threshold. This forced selling of pledged shares by the financiers.

Adani has used this opportunity to reduce the pledge risk and the solvency risk to the group by proactively cutting down on debt. This prepayment releases 168 million shares of Adani Ports bringing down the pledged percentage from 17.31% to 5.31%. It also reduces 27.56 million shares of Adani Green Energy bringing down the pledged percentage from 4.36% to 1.36%. Finally, it also reduces 11.77 million shares of Adani Transmission bringing down the pledged percentage from 6.62% to 5.22%.

The total value of all pledged shares of the group, including Adani Power and Adani Enterprises stands at Rs27,329 crore. The cascading effect on price was visible after Hindenburg Research issued a negative research note on Adani group terming it the biggest con job in history. This led to panic selling and the pledged shares exacerbated the crisis. That risk is substantially reduced now.

For the Adani group, it was a choice between focusing on its aggressive expansion versus consolidating its current position by cutting debt and addressing the reputation issue. It has opted for the latter and rightly so. In business, there are some things that just cannot wait. This sends the right message across to the shareholders of the Adani group.