Synopsis: The loan arrangements contemplated include mezzanine financing, cash-repayable stock-backed bridge loans, and an 18-month senior lending facility. The final of these structured instruments might eventually be refinanced with a long-term bond or loan. The Adani Group is paying $10.5 billion to acquire the two enterprises. According to reports, the Adani Group intends to raise $3 billion in promoter stock.
According to various bankers familiar with the negotiations, the Adani Group, which recently purchased Holcim’s local companies in India’s largest cement buyout, is in talks with more than a dozen international banks to borrow up to $4.5 billion through a combination of overseas loan instruments.
This would be one of the largest loan-based foreign currency fundraisings by an Indian corporate organisation. Tenured products, like as bonds with predetermined coupons, are often offered for purchase on foreign markets.
According to various bankers familiar with the negotiations, the Adani Group, which recently purchased Holcim’s local assets in Inclid’s largest cement deal, is in talks with more than a dozen banks to borrow up to $4.5 billion using a combination of international loan instruments.
This would be one of the largest loan-based foreign currency fundraisings by an Indian corporate organisation. Tenured securities, such as bonds with pre-specified coupons, are typically sold overseas to raise vast sums of money.
The loan arrangements contemplated include mezzanine financing, cash-repayable stock-backed bridge loans, and an 18-month senior lending facility. The final of these structured instruments might eventually be refinanced with a long-term bond or loan.
The current round of funding will be used to partially support the purchase of Holcim’s shares in the two Mumbai-listed cement businesses, Ambuja Cements and ACC. Barclays, Deutsche Bank, and Standard Chartered Bank had already underwritten the whole financing lines.
Those loan lines are now being divided, with numerous additional foreign banks participating in the operations. The Adani Group did not answer ET’s inquiries. Individual banks could not be reached for comment right away.
The senior loan facility is expected to generate up to $3 billion, while the mezzanine line is expected to raise Sl billion. The bridge loan, with maturities ranging from one to three years, is valued at $500 million and would be repaid in cash.
Bridge loans would be secured by stock in the two newly acquired cement companies.
The mezzanine loan is planned to be priced at 7-8 per cent. The loans will be priced after 450 basis points are added to the Secured Overnight Financing Rate (SOFR), a worldwide rate gauge that has replaced the London Interbank Offer Rate (LIBOR).
One basis point is equal to 0.01 per cent.
Top Global Banks
BNP Paribas NSE -0.10 per cent, Citi, JP Morgan, MUFG, Mizuho Bank, SMBC, and a few Middle Eastern bankers are among those engaging in the talks.
Mezzanine financing is a mix of debt and equity financing that allows the lender to convert debt to equity in the event of a default.
The panel is now investigating each bank’s ability to lend. Each bank may lend between $200 and $500 million.
“Adani Group is aiming to expand the syndication, which was previously confined to only three banks,” stated a process executive.
Previously, three banks underwrote the whole amount, each offering around $1.8 billion.
Another official stated, “The borrower is now checking with each bank giving different choices to generate dollar cash.”
The Adani Group is paying $10.5 billion to acquire the two enterprises. According to reports, the Adani Group intends to raise $3 billion in promoter stock.
Holcim, located in Switzerland, signed a binding agreement with the Adani Group for the transaction.
Holcim owns 63.19 per cent of Ambuja Cements and 54.33 per cent of ACC through subsidiaries.
According to the Adani family’s initial schedule, open offers for Ambuja Cements and ACC shareholders would commence on July 6 and end on July 19.
An open offer is made if an acquirer owns 25% or more of the company.
