22 March 2022
According to a note published on 14 March, Adani has indicated to the Moody’s ratings agency that it is failing to find an external source to refinance the US$500m of bonds maturing in December of this year, issued by its coal port North Queensland Export Terminal (or NQXT). NQXT (rebranded from Adani Abbot Point Terminal) is the port via which all coal mined from the Adani Carmichael thermal coal mine will be exported, and it is therefore an integral part of the disastrous Carmichael project.
Adani told Moody’s it plans to self-fund the refinancing, “Moody’s understands from NQXT’s management that the bonds will be refinanced via a drawdown on a subordinated shareholder facility, which is being funded by its sponsor”. In plain English this means that Adani is planning to refinance the debt with funds from within the Adani corporate structure.
Adani’s purchase of a 99-year lease for the port from the Queensland government in 2011 was debt-funded, and it has since struggled to refinance debt for the port on several occasions. The Moody’s note also mentions that Adani has already contributed US$359m to NQXT since 2020, mainly for the refinancing of previous maturing debts for which it was unable to raise external funds. It is not known where this cash originated from before being paid to NQXT via its Singapore-based sponsor, and it is not known from where exactly within the Adani conglomerate these new funds will come.
Adani has often struggled to find external finance for its controversial Australian thermal coal infrastructure. With over 40 major banks ruling out funding, it also had to self-fund the construction of the entire Carmichael thermal coal mine and rail network.
So what does self-fund mean in practice? It means that money is shifted from one or several parts of the Adani Group to its coal mine, rail line and/or coal port. The Adani Group’s complex corporate structure and history of related party transactions, intercompany loans (with and without interest), and asset transfers shows that it operates as a single entity shifting money within the group as needed.
This means any financing or investment in any Adani Group company frees up capital that could be used to fund the Carmichael mine and its associated infrastructure. So, to emphasise the point, any bank or investor financing any part of the Adani conglomerate, even if those funds are tied to a particular, non-coal purpose, is freeing up capital which could potentially be used for thermal coal mining. In the midst of the climate crisis this is unacceptable.
Last week, Market Forces wrote to some Adani company shareholders, including BlackRock, to ensure they are aware of these risks.
This is an argument we have made before, for example when JP Morgan, Deutsche Bank and Standard Chartered, all banks that have promised not to fund Carmichael coal, loaned $1b to Adani Enterprises in mid-2021.
Due to Adani’s track record of shifting money within the group, we urge all financiers of the Adani Group to cut ties with the conglomerate until it walks away from the destructive Carmichael thermal coal project.
Tell Adani’s major financiers to cut ties with the conglomerate until Adani walks away from the climate-wrecking Carmichael thermal coal project.