Adani Cement has achieved a significant milestone in its capital management strategy by securing a substantial $3.5 billion loan. This financing will be utilized to refinance debt connected to its acquisitions of Ambuja Cements Ltd and ACC, emphasizing the company's capacity to access the global financial market and maintain a robust liquidity position.
In a statement, the Adani Group highlighted the significance of this accomplishment, stating, "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 facility will result in an overall cost saving of $300 million for the Adani Cement vertical."
Adani Cement's acquisition of Ambuja Cements Ltd and ACC, which was valued at $6.6 billion and completed on September 22, established the company as the second-largest player in India's cement industry. It was also the largest acquisition in the infrastructure and materials sector.
The $3.5 billion loan is an integral component of the capital management plan outlined by Adani Cement in September 2022. This plan is designed to gradually reduce Adani Cement's debt load. The loan refinancing involved collaboration with ten international banks, including DBS, First Abu Dhabi Bank, and Mizuho Bank, and features a tenor of three years. It is expected to provide substantial cost savings for Adani Cement, contributing to its financial stability and growth prospects.
The group's press release emphasized the significance of this refinancing initiative, stating, "The re-financing program of $3.5 billion has been concluded with a clutch of international banks with debt maturity of up to 3 years, testifies the strong support and access to capital, supplementing the solid capital prudence adopted at all portfolio companies."
Adani Cement is actively working on enhancing its cement manufacturing capacity from 67 million tonnes per year to 100 million tonnes per year by 2025. This expansion is largely attributed to the acquisition of Sanghi Cement and is aligned with the company's strategy to leverage synergies across the integrated Adani infrastructure platform, strengthening its position in the industry.
Adani Group's entry into the cement sector began with a $10.5 billion deal to acquire Ambuja and ACC from Swiss company Holcim the previous year. The group has continued to fortify its presence in the sector through the acquisition of Sanghi Industries for $295 million in August. While the shares of ACC and Ambuja initially experienced declines, the successful refinancing is expected to bolster Adani Cement's financial position and provide essential support for its expansion plans.
