Adani Group advisers seek debt guidance after crisis
The financial advisers and lawyers at the Adani Group firms are holding initial conversations with their clients after the crisis at the Indian conglomerate sent several dollar obligations into distressed territory.
The investors are seeking guidance on how the group's debt structure will be affected under various scenarios, including the possibility of regulatory and legal redress, after short-seller Hindenburg Research accused the Adani Group of corporate malfeasance, according to people familiar with the matter.
Debt investors are contemplating heavy losses on their holdings if Gautam Adani is unable to restore confidence and stem losses in his industrial empire. The group's stocks suffered a more than $100 billion selloff after Hindenburg published its bombshell report on January 24.
According to the people, discussions are at the initial stage and creditors have not started to organize. They said that new investors are making inquiries about potential opportunities.
An Adani Group representative didn't offer any immediate comment.
Adani has repeatedly denied Hindenburg's allegations of corporate wrongdoing and threatened legal action. The billionaire said in a video this week that his companies have an impeccable track record of fulfilling their debt obligations.
Several of the securities issued by Adani Group companies have fallen sharply this week to levels typically associated with financial trouble. Adani Ports and Special Economic Zone Ltd's August 2027 bonds dropped to around 71 cents on the dollar, and Adani Green Energy's September 2024 obligation fell to some 64 cents at one point. They have rebounded after constructive calls from some sell-side strategists.
A plan to raise as much as 10 billion rupees $122 million after the market rout was approved by Flagship company Adani Enterprises Ltd., according to people familiar with the matter.
Other tests loom as Adani Ports and Special Economic Zone Ltd. meet its bond obligations on Thursday. On Friday, it was reported that India's Ministry of Corporate Affairs had started a preliminary review of Adani Group's financial statements.
Goldman Sachs Group Inc. strategists said they don't see wider contagion to other Indian companies because of the issues faced by the group, which is the parent of Adani Green Energy Ltd. and Adani Transmission Ltd.
Bondholders usually consult lawyers, bankers, and advisers when the company's financial prospects weaken so they can familiarize themselves with potential losses and remedies if the firm struggles to pay its debts. A company that asks creditors to waive penalties, buy back bonds and loans or swap them for new debt can also be able to do so in easy terms. The process is to determine how strong the holders are on assets backing their securities in case of a default by the company.
With the help of P R Sanjai, Rick Green and Harry Suhartono.