Skip to main content

Guatam Adani repaid 1.1bn loan.

 Gautam Adani, whose Indian busi­ness empire is under pres­sure over fraud alleg­a­tions, repaid a $1.1bn share-backed loan last week after facing a mar­gin call of more than $500mn, accord­ing to four people with dir­ect know­ledge of the mat­ter. Adani’s empire, which spans air­ports to energy, has been reel­ing since New York-based short seller Hinden­burg Research accused its last month of account­ing fraud and stock price manip­u­la­tion. The Adani group has denied the claims. However, the lenders of the $1.1bn loan, which included Barclays, Cit­ig­roup and Deutsche Bank, reques­ted last week that the bil­lion­aire top up the amount of stock pledged against the loan after a sharp fall in the shares of the lis­ted Adani com­pan­ies, accord­ing to the people with know­ledge of the mat­ter.


As the shares con­tin­ued to slide, Barclays informed Adani of a mar­gin call equi­val­ent to 50 per cent of the loan in cash, said the people who spoke on con­di­tion of anonym­ity. Rather than post cash against the loan, which did not mature until Septem­ber 2024, the Adani Group’s founder and his fam­ily opted to repay it com­pletely. Adani has not dis­closed the source of the funds used to repay the loan. Adani Group said it did not receive a formal request for a mar­gin call.


On Monday, Adani announced the early repay­ment of the loan in full, pitch­ing it as a pro­act­ive move to reduce lever­age. Adani declined to spe­cify which cor­por­ate or per­sonal entity was the bor­rower on the $1.1bn loan but referred the Fin­an­cial Times to a state­ment released earlier this week that said the pre­pay­ment was «in con­tinu­ation of the pro­moters’ com­mit­ment to reduce the over­all pro­moter lever­age». In India, pro­moters refer to founders or the people con­trolling a com­pany. Adani said the repay­ment would release 168mn shares in Adani Ports, 27mn in Adani Green Energy and 12mn in Adani Trans­mis­sion.


On Monday, mem­bers of the Con­gress party, India’s biggest oppos­i­tion group, demon­strated out­side par­lia­ment to demand answers about devel­op­ments at Adani, which was last week forced to with­draw a $2.4bn share offer­ing. Pro­test­ers also gathered near the state-owned Life Insur­ance Cor­por­a­tion of India and State Bank of India, which have expos­ure to Adani, call­ing for the gov­ern­ment to allow debate over the poten­tial loss of tax­pay­ers’ money. «The gov­ern­ment is scared about hav­ing a dis­cus­sion on Adani in par­lia­ment,» Rahul Gandhi, a Con­gress leader and mem­ber of par­lia­ment, said. On Tues­day, Gandhi slipped ref­er­ences to Adani into a speech respond­ing to an unre­lated pres­id­en­tial address.


The Hinden­burg report gave the cri­ti­cisms impetus, the res­ult of a two-year invest­ig­a­tion, which

Guatam Adani

accused the group of oper­at­ing a net­work of off­shore entit­ies to con­ceal the extent of the Adani fam­ily’s con­trol, skirt rules on hold­ings of lis­ted com­pan­ies, and boost stock prices. Adani rejec­ted the claims, brand­ing them base­less and a «cal­cu­lated attack on India» and its insti­tu­tions. Yet the gov­ern­ment has remained mostly silent about the crisis that is assail­ing India’s most prom­in­ent mag­nate while rais­ing ques­tions about the integ­rity of India’s cap­ital mar­kets. Last Wed­nes­day, as Adani’s scrapped share sale, grabbed head­lines, fin­ance min­is­ter Nirmala Sithara­man unveiled a busi­ness-friendly budget meant to show the gov­ern­ment’s eco­nomic com­pet­ence.

At the week­end, Sithara­man weighed in on Adani, say­ing reg­u­lat­ors would «do their job» in response to Hinden­burg’s alleg­a­tions and insist­ing that «our mac­roe­co­nomic fun­da­ment­als, our eco­nomy’s image. » Research­ers said that pro-gov­ern­ment social media users had swung into motion, with the hashtag #IStand­withAdani trend­ing on Twit­ter as nation­al­ists boos­ted a nar­rat­ive that described the Hinden­burg report as a con­spir­acy. Ex-crick­eter Virender Sehwag, a «proud Indian», claimed to his 23mn fol­low­ers that «the hit job on India’s mar­ket looks like a well-planned con­spir­acy». Jaggi Vas­udev, a spir­itual fig­ure known as Sad­hguru who has 4mn fol­low­ers, tweeted that for­eign «hit jobs on India’s eco­nomy» were a «cen­tur­ies-old» phe­nomenon.

«If shin­ing India is sore to some eyes, they need shades as India will surely rise & shine». Many Indi­ans asso­ciate Adani with the prime min­is­ter. In Janu­ary, the BBC aired a doc­u­ment­ary about Hindu-Muslim blood­let­ting that killed more than 1,000 in Gujarat in 2002, when Modi was chief min­is­ter. Online, many Indi­ans defen­ded Modi’s repu­ta­tion and attacked the film.

Near the Life Insur­ance Cor­por­a­tion HQ on Monday, a small group affil­i­ated with Con­gress posed with cash-stuffed suit­cases and held up a giant mock cheque made out to «Modi’s friend Adani». Indian polit­ics watch­ers doubted that the scru­tiny of Adani would have a decis­ive impact on Modi’s pop­ular­ity.

www.sba.tax

Labels:

Comments

Post a Comment

Cloud Bookkeeping

HS2 cost cuts new routes and add delays.

 Trans­port depart­ment offi­cials have begun work on «Project Sil­ver­light» sug­gest­ing the high­speed rail scheme might face four addi­tional years of delay. The planned High Speed 2 rail line faces fur­ther delays of up to four years and more cuts to the project under plans being drawn up by min­is­ters to rein in its bal­loon­ing costs. The extra delays to the coun­try’s biggest infra­struc­ture project would mean that it would not be com­pleted until as late as 2045 — 12 years after ori­gin­ally planned. «This is a func­tion of infla­tion; we are hav­ing to find huge sav­ings because the cost of everything the depart­ment is already doing will have become so much more expens­ive by then,» said one gov­ern­ment offi­cial. In Octo­ber, the FT repor­ted that the Treas­ury had asked HS2’s man­age­ment team to identify poten­tial cuts or «scope reduc­tions» to the high-speed line. Trans­port depart­ment offi­cials have sub­sequently begun work on Project Sil­ver­light aimed at fi...
4 comments
Read more

Small business will be excluded from fraud law.

  Min­is­ters are plan­ning to exclude small busi­nesses from anti-fraud legis­la­tion by nar­row­ing the scope of a crim­inal offence tar­get­ing com­pan­ies that fail to pre­vent eco­nomic crimes. MPs and anti-cor­rup­tion cam­paign­ers had hoped the gov­ern­ment would seek to amend the eco­nomic crime and cor­por­ate trans­par­ency bill to ensure the new offence covered all com­pan­ies. The plans to limit the scope of the amend­ments will also dis­ap­point those who had hoped the legis­la­tion would remove key hurdles to the pro­sec­u­tion of white-col­lar crime. A new «fail­ure to pre­vent» offence for fraud would bring it in line with exist­ing sim­ilar cor­por­ate offences for bribery and tax eva­sion. At present, pro­sec­utors need only prove that organ­isa­tions lacked «reas­on­able» or «adequate» con­trols to pur­sue the offence in bribery and tax eva­sion cases. «It would be much more sens­ible for the gov­ern­ment to provide strong guid­ance for SMEs on what these pro­ce...
3 comments
Read more

Doubt on CS's collateral.

  Credit Suisse provided an emergency $140mn loan to Greensill Capital based partly on invoices to companies that deny ever doing the business stated on the documents. The Swiss bank provided the loan in October 2020, less than five months before the collapse of Greensill, a supply chain finance firm that counted former British prime minister David Cameron as a senior adviser. Invoices issued by metals magnate Sanjeev Gupta’s Liberty Commodities and sold to Greensill formed part of the collateral for the loan, according to documents seen by the Financial Times and people familiar with the transaction. Yet several of the parties named on the invoices have told the FT they did no business with Liberty. GFG has consistently denied any wrongdoing. Credit Suisse’s loan had a clause dictating that the collateral value had to be equal to or greater than the $140mn borrowed. The terms of the debt agreement only allowed invoices on Green-sill’s balance sheet to count towards this tally if t...
2 comments
Read more