Home > Westpac out of Adani Abbot Point refinancing?

Westpac out of Adani Abbot Point refinancing?

11 October 2017

Westpac CEO Brian Hartzer today confirmed that the bank’s coal lending restrictions would, in theory, apply to restrict finance for infrastructure projects that are directly linked to new coal basin developments. That looks like a pretty good indication that Westpac won’t contribute to a refinancing deal for Adani’s Abbot Point coal terminal.

Hartzer’s comments were followed by news on Thursday that top Australian and US banks had shied away from a US$500 million bond, which would help refinance Adani’s Abbot Point cal export terminal. Apparently Adani is looking to smaller international players First Abu Dhabi bank and Investec to take up the bond issue, on which IDFC Singapore is acting as Adani’s adviser.

Abbot Point needs to refinance $1.5 billion of debt in 2018, and over $2 billion by 2020. The fortunes of the coal terminal, which sits on the edge of the Great Barrier Reef, are intrinsically linked with Adani’s Carmichael coal project, which would see the company rip up the Galilee Basin to build the world’s biggest export coal mine. But without the promise of Carmichael coal being shipped out of Abbot Point, the port ‘runs the risk of becoming a stranded asset.’

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The massive potential loss Adani faces on Abbot point may go some way to explaining the company’s  desperation to push ahead with its Carmichael project in the face of a declining global coal market. It may also help explain the federal and Queensland state governments’ unwavering support of Adani’s dirty coal plans.

Westpac’s apparent aversion to refinancing Abbot Point leaves Adani in a tricky position. Westpac was one of the major lenders to a refinancing deal in 2013, stumping up $250 million. Commbank is the other Australian bank with plenty of skin in the game, having loaned a total of $540 million to that same deal.

With Westpac apparently out, and Adani’s ‘Australian house of cards’ looking increasingly unstable, will Commbank rule out any further finance for Abbot Point?