Adani Ports and Special Economic Zone (APSEZ) has initiated a debt buyback program, purchasing up to $130 million per quarter of its July 2024 bonds and equivalent amounts in each of the subsequent four quarters. This move is part of the company’s proactive management of upcoming debt maturities, and is aimed at reducing refinancing risks. S&P Global Ratings described the buyback as an “opportunistic exchange,” reflecting APSEZ’s liquidity position and its ability to manage upcoming debt maturities. APSEZ’s management is keen to show investors that its liquidity position is comfortable, and that it is taking proactive measures to address upcoming debt maturities.
S&P Global Ratings expects APSEZ to have sufficient cash reserves to repay $130 million of the notes, given the company’s healthy operating cash flow. The rating agency projects the company’s operating cash flow to be Rs 8,900 crore for fiscal 2024. While APSEZ should have adequate liquidity over the next 12 months, S&P Global Ratings noted that the company will remain flexible with capex, adjusting it based on business performance and funding availability.
In fiscal 2023, APSEZ handled around 339 million tonnes of cargo volume, which was slightly below S&P Global Ratings’ estimate of about 355mt. Despite this, the rating agency expects APSEZ to maintain robust EBITDA margins of 55-60% over the next two fiscal years, supported by stable operating performance.
Shares of Adani group companies took a hit after Hindenburg Research accused the conglomerate of accounting fraud, improper use of offshore tax havens, and stock manipulation in a January 24 report. However, the group has denied all allegations.
Overall, the debt buyback program is a positive move by APSEZ, reflecting the company’s proactive approach to debt management and its commitment to addressing refinancing risks. The buyback should help to regain investor confidence and improve the company’s liquidity position, while also demonstrating that APSEZ is taking steps to address its upcoming debt maturities.
