Adani Cement completes $3.5 bn debt refinancing taken for ACC-Ambuja buy

Adani Group has completed a $3.5 billion debt refinancing taken for acquisition of Ambuja Cements and ACC, billionaire Gautam Adani-led conglomerate says in a release on Friday. The group has secured loans from 10 international banks including DBS, First Abu Dhabi Bank, and Mizuho Bank, with debt maturity of up to 3 years.

“Adani Cement, through Endeavour Trade and Investment Ltd, is pleased to announce the successful completion of its refinancing program for acquisition debt taken for Ambuja and ACC, through a USD 3,500 million financing package, raised from a clutch of international banks,” the release notes.

The refinancing program will result in an overall cost saving of $300 million for the Adani Cement vertical. “This achievement reflects our commitment to financial stability and growth,” it highlights.

As per the release, the refinancing program has been concluded with a clutch of international banks with debt maturity of up to 3 years, which testifies the strong support and access to capital, supplementing the solid capital prudency adopted at all portfolio companies.

DBS Bank, First Abu Dhabi Bank, Mizuho Bank and MUFG Bank acted as mandated lead arrangers and bookrunners and underwriter to the transaction. In addition, Barclays Bank PLC, BNP Paribas, Deutsche Bank AG, ING Bank, Sumitomo Mitsui Banking Corporation and Standard Chartered Bank acted as mandated lead arrangers and bookrunners for the transaction.

Cyril Amarchand Mangaldas, Latham and Watkins acted as Borrower’s counsel for the financing with Allen & Overy LLP, Talwar Thakore and Associates acting as legal counsels to the lenders.  

Adani Cement is the second largest cement player in India, with the $6.6 billion acquisition of Ambuja and ACC from Switzerland's Holcim in the largest deal in infrastructure and materials space concluded in September 2022. The $3.5 billion facility marks the continued execution of the capital management plan outlined in Sep 2022 that will see step wise planned deleveraging of Adani Cement. With cement vertical Net Debt to EBITDA now under 2x, the release highlighted.

Currently, Ambuja Cements and ACC have a combined installed production capacity of 67 million tonnes per annum (MTPA) which is expected to move to 100 MTPA by 2025 with recent acquisition of Gujarat-based Sanghi Cement. In August this year, Ambuja Cement announced acquisition of Sanghi Industries at an enterprise value of ₹ 5,000 crore, which has integrated manufacturing unit at Sanghipuram in Gujarat’s Kutch district.

With the ongoing capital expenditure of 14 MTPA and with commissioning of 5.5 MTPA capacity at Dahej and Ametha by Q2 of FY24, the Adani Group’s capacity will be 101 MTPA by 2025.

ACC & Ambuja are among the strongest brands in India with immense depth of manufacturing and supply chain infrastructure. Adding to it, the cement companies also derive benefit from synergies with the integrated Adani infrastructure platform, especially in the areas of raw material, renewable power and logistics, which has resulted into improvement in the EBITDA per tonne from ₹340 per tonne in quarter ending September 2022 (immediately after the acquisition) to ₹1,253 per tonne in the quarter ending June 2023. 

Last month, Ambuja Cements incorporated three new wholly-owned subsidiary companies to support the leasing of aircraft as well as to manufacture cement, RMX, and allied products. The names of the companies are Lotis IFSC Private Limited, Ambuja Concrete North Private Limited, and Ambuja Concrete West Private Limited.