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"Adani Cement Successfully Refinances $3.5 Billion Loan for ACC and Ambuja Cements Acquisition"

In a remarkable testament to growing support from lending institutions and investors, Adani Cement has completed the refinancing of a $3.5 billion loan initially acquired for the purchase of ACC and Ambuja Cements. This strategic move follows the September 2022 acquisition by Gautam Adani, executed through Endeavour Trade and Investment Ltd, a special purpose vehicle, of Holcim India’s assets, which included Ambuja Cements Ltd and ACC Ltd.

The acquisition involved taking over Holcim’s substantial stakes in Ambuja and ACC, along with extending an open offer to the shareholders of both companies. The combined value of the Holcim stake and the open offer for Ambuja Cements and ACC amounted to a staggering $6.50 billion. This not only marked Adani’s largest-ever acquisition but also emerged as India’s most significant M&A transaction in the infrastructure and materials sector.

This significant transaction encompassed Holcim’s 63.11% stake in Ambuja Cements, which, in turn, owned a 50.05% interest in ACC, alongside Holcim’s direct 4.48% stake in ACC.

Adani Cement recently announced the successful completion of a comprehensive refinancing program for the debt associated with these two acquisitions. The refinancing package was made possible through collaboration with a group of esteemed international banks, leading to substantial cost savings of $300 million.

A total of ten international banks participated in this initiative. In their statement, Adani Cement expressed, “The refinancing program of $3.5 billion has been concluded with a clutch of international banks with debt maturity of up to 3 years, testifies to the strong support and access to capital, supplementing the solid capital prudence adopted at all portfolio companies.” They continued, “This showcases Adani’s robust access to the global financial market and strong liquidity position. This achievement reflects our commitment to financial stability and growth.”

This $3.5 billion refinancing venture aligns with the capital management plan outlined in September 2022, signaling a phased deleveraging of Adani Cement, with the cement vertical’s net debt to EBITDA (earnings before interest, tax, depreciation & amortization) ratio now comfortably below two times.

Furthermore, this success has been attributed to the synergy with the integrated Adani infrastructure platform, particularly in areas of raw material, renewable power, and logistics. These areas, where Adani portfolio companies have substantial experience and expertise, have contributed to the improvement in EBITDA per tonne. This figure has seen remarkable growth from Rs 340 per tonne in the quarter ending September 2022 (immediately following the acquisition) to Rs 1,253 per tonne in the quarter ending June 2023, showcasing a clear commitment to deleveraging and elevated coverage positioning.

With the acquisition of Sanghi Cement, Ambuja Cement and ACC together boast a combined installed production capacity of 67 million tonnes per annum, which is set to rise to 100 million tonnes by 2025. This positions the group as the second-largest cement maker in India, following UltraTech Cement led by Kumar Manglam Birla.

Adani Cement revealed that the refinancing of this substantial $3.5 billion transaction was made possible through facilities provided by 10 international banks. DBS Bank, First Abu Dhabi Bank, Mizuho Bank, and MUFG Bank acted as mandated lead arrangers, bookrunners, and underwriters for the transaction. Additionally, Barclays Bank plc, BNP Paribas, Deutsche Bank AG, ING Bank, Sumitomo Mitsui Banking Corporation, and Standard Chartered Bank also played crucial roles as mandated lead arrangers and bookrunners for this significant financial undertaking.

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