Bid to boost confidence, Adanis prepay USD 1.1 billion to free pledged shares

“In light of recent market volatility and in continuation of the promoters’ commitment to reduce the overall promoter leverage backed by Adani listed company shares, we are pleased to inform that promoters have posted the amounts to prepay USD 1,114 million ahead of its maturity of September 2024,” the group said in a release.

With this prepayment, about 168.27 million shares, representing 12 per cent of the promoters’ holding in Adani Ports & Special Economic Zone, will be released, the group said.

Nearly 27.56 million shares, representing 3 per cent of promoters’ holding in Adani Green Energy and around 11.77 million shares, representing 1.4 per cent of promoters holding in Adani Transmission will also be released.

The Adani group said the move is in continuation of the promoters’ assurance to prepay all share-backed financing.

This also comes in the wake of a sustained fall in share prices of some of these companies after US short-seller Hindenburg Research’s accusation against the Adani Group of improper use of offshore tax havens and stock manipulation, a charge that the Group has denied.

The resultant fall in the value of shares of these companies triggered the possibility that the lenders could invoke the pledge or seek additional collateral, something that has been circumvented by the move to prepay and get the pledged shares released.

On Monday, the shares of Adani Ports rose 9.46 per cent to end at Rs 546.05 apiece on BSE. While Adani Green fell 5 per cent to close at Rs 887.55 apiece, Adani Transmission declined 10 per cent to Rs 1,261.4 apiece.

The shares of other Adani Power, Adani Total and Adani Wilmar tanked 5 per cent each. The shares of the Group’s flagship were down 0.74 per cent.

Meanwhile, ACC gained 2.24 per cent, shares of Ambuja Cement and NDTV were up 1.54 per cent and 1.37 per cent, respectively.

Share pledging is a normal practice undertaken by promoters to raise funds for various purposes. Securities of the promoter held in a depository account can be pledged/hypothecated to avail of the loan or credit facility.

After the pledgor (promoter who wants to borrow) repays the loan to the pledgee (lender), the pledgor submits an instruction to its depository participant to initiate the closure of pledge by indicating the option “close the pledge/ hypothecation.”

In the case of invocation of a pledge – when the pledgor defaults– the securities are transferred from the pledged balances of the pledgor to the pledgee’s (banks and finance companies) beneficial owner account.