Tuesday 09 August 2016 by Alen Golubovic Company updates

Adani launches tender offer to buy back $75m of 2018 bonds

THIS CONTENT IS SUITABLE FOR WHOLESALE INVESTORS ONLY

On 9 August 2016, Adani Abbot Point Terminal (‘AAPT’) announced a tender offer for holders of its outstanding $500m (US$380m) bonds due 1 November 2018 to purchase up to an aggregate cash amount of $75m, or around 15% of the total face value outstanding (noting the bonds will be bought back at a slight discount to par). All bonds bought back by the issuer will be cancelled

Adani Abbot Point Terminal

As we previously reported, AAPT outlined a $240m debt reduction plan which included a $75m initial equity injection from the parent. It would appear likely that AAPT is using the $75m of proceeds from the parent to fund this tender offer.

The offer closes on 16 August 2016 and has a maximum purchase spread of 635bps (which implies a minimum capital price of about $97.17). The tender results and pricing details are expected to be unveiled on 17 August 2016. We will provide further details to bondholders ahead of this date.

After the tender announcement, the bond price moved higher and we are currently seeing trading levels higher than the minimum capital price set in the tender offer.

The bonds include a 100bps coupon step up, to 6.75% from 5.75%, to factor in the two notch downgrade by Moody’s earlier in the year. The bonds are considered by S&P to be investment grade.

We see the tender offer and buyback of 2018 debt as positive for AAPT, however we expect further debt reduction will be needed to address the refinancing of around $1bn of debt in 2018. The tender demonstrates the issuer’s commitment to reducing debt in line with previous statements which we also see as positive.

Please contact your FIIG representative for further information on the AAPT AUD bond. Available to wholesale investors at a minimum face value of AUD200,000.