Monday, 2 October 2017

"The Truth" about Adani - according to Adani

The foreign multinational Adani Group appears to be trying a new public relations tack - replacing smoozing Australian politicians with a Facebook mini ad campaign.

One of the first of this mining corporation’s ‘truths’ is this:

Actually that’s not quite what Standard & Poors Global Ratings announced earlier in 2017. The BBB- (satisfactory) bond rating is for Adani Ports and Special Economic Zone Limited,  not for any specific underutilised infrastructure such as Adani Abbott Point Coal Terminal (AAPCT) or the as yet unrealised Carmichael Coal Mine and Rail Project in the Galilee Basin, Queensland.

The Adani Abbott Point Coal Terminal is not even listed as an Adani Ports and Special Economic Zone Limited asset having been hived off some years ago.

The Adani ‘fightback’ video also failed to inform viewers that Moody’s Investor Services has given Adani Ports and Special Economic Zone Limited bonds a Baa3 rating which is essentially at the bottom ending of the rating scale being only a grade or two above junk bonds.

All these ratings tell the world is that it is likely that this India-based mining corporation will be able to pay back money it has borrowed from banks and financial institutions, but that it still has solvency issues.

Adani Abbott Point Coal Terminal is reportedly highly leveraged:

AAPCT faces a A$1.48bn refinancing by November 2018 and a cumulative debt refinancing of $2.11bn by 2020. The first payment of $A85m was due to be paid to the State Bank of India in September 2017. This refinancing is made even more difficult by the fact that the Wiggins Island Coal Export Terminal (WICET) faces a stressed US$2.8bn refinancing around the same time. For the purposes of refinancing Abbot Point, Adani needs to demonstrate that Carmichael will progress in order to convince financiers that AAPCT will be fully utilized into the future…..

The owner of the Carmichael mine proposal, Adani Mining Pty Ltd, having shareholder’s funds of negative $230m and net debt of $1.48bn, making it a high-risk proposed user of up to 50% of the total volume of the Abbot Point port;

AAPCT has estimated net debt of $2.04bn (including through a series of complex intercompany loans) now roughly matching the original investment price, plus subsequent capex. With combined shareholders’ funds estimated at negative $228m, it appears that the AAPCT is entirely debt funded…..

Loans between entities within the complex structure mean that AAPCT entities have advanced $52m to the Adani Family’s T0 proposal and $182m to the Adani Family’s Carmichael Rail proposal;

The sole Singapore parent entity director is Vinod Adani, who has been the subject of investigations for money laundering by the Indian Director of Revenue Intelligence (DRI). [Institute for Energy Economics and Financial Analysis, October2017]

As Adani faces widely reported ongoing fraud and corruption allegations in India which are not likely to go away in the near future one has to wonder why the Adani Group thinks this 1:39 minute video will sway the Australian electorate.

Here is the odd text which accompanies the video:

Trying to stall pro-job developmental projects to further their own hidden anti-development agenda is a sad but true picture of these so called activists and their funding organisations. These ‘anti-development’ ‘anti-job’ campaigns affect job creation and the economic growth story of a nation. Some of them are spreading #Whitelies and misleading people in Australia and India to defame Adani's image besides sabotaging the progressive growth of Regional Queensland in particular and Australia in general, to be brought by Carmichael Coal mine. The entire baseless accusation on Adani is based on just one screenshot of random text with no mention of its origins or reference. Time to see facts and hear the truth. These allegations about abbot Point Coal Terminal viability and Adani Group finances are absolutely baseless and far from the facts.

-The Abbot Point Coal Terminal has consistently delivered 100% of supply-driven throughout and is not a low utilisation of Asset.
- The renewal of the TOP contracts are normal features of the infrastructure capacity contracts in Australia. There is currently queue at Abbot Point for port capacity which means that the demand for the capacity is greater than the capacity Abbot Point Coal terminal can actually provide to the access seekers. Then how does it have risky dependence on Carmichael mine?

Adani Mining is fully funded by shareholder/associate company funds and there is no third party or bank debt which has funded the development of the mine till now. The interpretation of the financial statement on which the question is based is wrong. Abbot is a profit making company. The capital structure of Abbot point is rated by rating agencies and has investment grade rating from S&P (BBB-). The analysis of the nos. from the balance sheet by Getup is not correct. In fact, the whole video is a bundle of lies.

Shameful attempt to twist facts and concoct lies to spin a false story.

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