Investors are looking for guidance on how the expanding pool’s debt structure will be affected in various scenarios, including the prospect of regulatory and legal redress, following short sellers. Hindenburg’s study according to people familiar with the matter.
Debt investors are contemplating heavy losses on their holdings if Gautam Adani could not restore trust and prevent losses in his industrial empire. The group’s shares sold off more than $100 billion after Hindenburg released a shock report on January 24.
Bondholders are seeking advice on the capital structure of the various companies in Adani’s industrial empire, the seniority of their various obligations and their recourse in the case of regulatory agencies. investigative agency, who declined to be identified because they were not authorized to speak publicly about their clients.
According to the people, the discussions are in the early stages and the creditors have not yet begun to organize. New investors are also questioning potential opportunities, they added.
A representative for the Adani Group was not immediately available for comment.
Adani has repeatedly denied Hindenburg’s allegations of corporate misconduct and threatened legal action. The billionaire said in a video this week that his companies have a “perfect” track record in meeting their debt obligations.
Some securities issued by Adani Group companies have plummeted this week to levels generally consistent with financial distress. Port of Adani and Special Economic Zone Ltd’s August 2027 bonds fell to about 71 cents per dollar, and Adani Green Energy’s September 2024 debt obligation at one point fell to about 64 cents. They have since rebounded amid constructive calls from several sell-side strategists.
Leading company Adani Enterprises Ltd. has postponed a plan to raise up to 10 billion rupees ($122 million) through an initial public offering of bonds in line with market practice, according to people familiar with the matter.
While Adani Ports and Special Economic Zone Ltd. believed to have met its bond obligations on Thursday, other tests have yet to emerge. On Friday, it was reported that India’s Ministry of Companies has commenced a preliminary review of the financial statements of Adani Group.
Meanwhile, strategists at Goldman Sachs Group Inc. said it does not see a wider contagion to other Indian companies from the problems facing the group, the parent company of the likes of Adani Green Energy Ltd. and Adani Transmission Ltd.
Bondholders often consult attorneys, bankers, and advisors when a company’s financial outlook weakens so they can familiarize themselves with potential losses and remedies should the company encounter difficulty in paying debt. Possible solutions include the company asking its creditors to waive penalties, buying back the bonds and loans, or swapping them for new debt on easier terms. This process involves trying to gauge the extent to which owners will claim the assets backing their securities in the event of a company default.
