Adani group company's bonds fall to distressed levels after FPO withdrawal

Adani group company's bonds fall to distressed levels after FPO withdrawal

Adani group, one of India’s most influential and powerful conglomerates, has seen its bonds plunge to distressed levels after the company announced the withdrawal of its proposed Follow-On Public Offer (FPO) in March 2021.

The move dealt a devastating blow to investors who had hoped for a liquidity injection from the massive FPO, which would have been the largest ever in India.

In this blog post, we'll take a look at how Adani's bonds have been impacted following the announcement and what this might mean for other companies looking to tap capital markets.

Adani Ports and Special Economic Zone Ltd (APSEZ) dollar bonds fell to distress on Monday, a day after the company said it would not proceed with a planned $1 billion share sale.

According to Thomson Reuters data, the yield on APSEZ's 6.875 percent 2023 bonds jumped 275 basis points to a record high of 13.625 percent, pushing the bond's price down to 87.5 cents on the dollar from 92.5 cents on Friday.

The move came after APSEZ, part of billionaire Gautam Adani's conglomerate, said late on Sunday that it had withdrawn its application for a share sale due to adverse market conditions. The company had been seeking to raise to $1 billion through a rights issue or preferential allotment of shares.

What is an FPO?

An FPO is a firm public offer, or a rights issue in which new equity shares are sold by a company to the public to raise capital. The Adani group company's bonds fell to distressed levels after it withdrew its FPO on Monday, sending shockwaves through the markets.

The move came just a day before the scheduled share sale was to open for subscription, with the company saying that "market conditions were not conducive" for the offer.

This is the second time in less than two years that an Adani group firm has been forced to abandon a major fund-raising exercise due to poor market response.

In 2016, Adani Ports and Special Economic Zone Ltd (APSEZ), India's largest private port operator, had to shelve plans for a $1 billion IPO citing similar reasons.

The failed FPO comes at a time when the Mumbai-listed company is reeling under a massive debt burden of nearly Rs 45,000 crore ($6.4 billion).

It has been trying to pare this down through divestments and asset sales but has so far only managed to reduce it by around Rs 10,000 crore.

The failed share sale will put more pressure on the company's finances and may force it to consider more drastic measures such as selling off assets or even resorting to debt restructuring.

What does this mean for the Adani group?

The Adani group is an Indian conglomerate that has been embroiled in controversy over the development of a coal mine in Australia. The company's bonds have fallen to distressed levels after the withdrawal of a $1.5 billion fundraising plan. This means that the company is now at risk of defaulting on its debt obligations.

The Adani group has been trying to raise money to finance the development of the Carmichael coal mine in Australia. However, the company has been unable to secure funding from major banks and other financial institutions. The withdrawal of the $1.5 billion fundraising plan means that the company will now have to find alternative sources of funding.

The Adani group is one of the largest conglomerates in India. The company has interests in a wide range of businesses, including mining, power generation, and infrastructure development. The Carmichael coal mine project is one of the most controversial projects that the company is involved in.

The Adani group has come under fire for its environmental record and its ties to the Indian government. The company has been accused of using forced labor at its mines in Africa and Asia. Additionally, there are concerns about the potential impact of the Carmichael mine on the Great Barrier Reef.

Despite these controversies, the Adani group remains a powerful force in India.

The company's founder, Gautam Adani, is one of the richest men in India with a net worth of $11 billion. The Adani group also enjoys

How did the markets react?

The Adani group company's bonds fell to distressed levels after the FPO withdrawal, with the markets reacting negatively to the news. The company's share price fell sharply, and trading was suspended for some time.

There was concern that the company would not be able to meet its debt obligations, and that this could lead to a default. The situation was compounded by the fact that Adani is a highly leveraged company, with a large amount of debt relative to its equity.

What does this mean for investors?

The Adani group is an Indian conglomerate with interests in energy, resources, logistics, and infrastructure. The company's bonds have fallen to distressed levels after a planned $1.5 billion share sale was withdrawn.

What does this mean for investors?

The withdrawal of the share sale has raised concerns about the Adani group's financial health, and its ability to service its debt. This has led to a sell-off in the company's bonds, which are now trading at levels that indicate distress.

This is bad news for investors in the Adani group, as it raises the risk of a default on the company's debt obligations. Investors will be closely watching the situation to see if the Adani group can raise the necessary funds through other means.

Conclusion

The Adani group's decision to withdraw its FPO has caused a dramatic plunge in its bonds, resulting in them reaching distressed levels. This news has negative implications for the company, as well as investors who hold these bonds. It is important to review any investments before committing, and be aware of how potential changes may affect their value in the future.