Adani to prepay loans worth $500 million to boost confidence

There is an old army saying that the best way out of a problem is through it. For now, Adani has decided to do the best thing in the circumstances; building shareholder confidence and trust. In that light, he has decided to prepay loans worth $500 million as a confidence booster for investors and lenders. 

Short-seller Hindenburg has given the Adani Group some real sleepless nights. The value of group stocks nosedived, and Adani Enterprises had to call off its FPO under pressure from anchor investors. The stock prices of the Adani group may have recovered from the depths, but it is still way below the peaks of December 2022. Adani needs a solid narrative now.

That narrative has come in the form of voluntary prepayment of loans. Prior to the Hindenburg saga, Adani Group had borrowed $4.5 billion from Barclays, Standard Chartered and Deutsche Bank to bankroll its acquisition of Ambuja Cements and ACC from Holcim. A small portion of the loan of $500 million, is due on March 09, 2023. To give confidence to the markets and to lenders, Adani has opted to prepay this loan ahead of the due date.

The hope is that such a move would help restore confidence in the group; and on the India story too. Karan Adani had also underlined that most of the leading Adani group companies would look to prepay loans before they were due. This not only gives out the right signals about the solvency and liquidity position of the group, but also a statement of good intent. Above all, in tough times, it is best to focus on consolidation than to focus on rapid growth.