AEML in ‘complex’ US$1bn bond issue

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L&L Partners represented Adani Electricity Mumbai Limited (AEML) and Power Distribution Services in the issuance of US$1 billion senior secured notes due 2030.

The investment-grade bond issue generated significant interest from international investors and was oversubscribed by 5.9 times. The transaction is the first offering by a private Indian utility that offers a unique combination of regulatory assets, fixed costs, regulated tariffs and assured cash flows with minimal counterparty risk.

“This was one of the largest single US-dollar bond issuances,” Raghavan told Asia Business Law Journal. “It is of special significance for us as we have been involved with the financing of this issuer right from when it was taken over as a business by the Adani Group.”

“The issuance was a complex one,” Shahani commented on the transaction. “It included a highly negotiated covenant package, a structured security package, as well as a simultaneous secondary equity and shareholder funding transaction, capex ECB [external commercial borrowing] funding, replacement of the entire working capital funding of the issuer and bespoke hedging arrangements for the ECB and the bonds, in relation to each aspect of which we believe we made a significant contribution to, as the issuer’s adviser on the issue.”

Shahani added: “As electricity distribution is a highly regulated sector in India, with limitations on security that can be provided, etc., creating an efficient financing structure is of paramount importance. Ensuring a well-priced, long-term and stable source of funds, such as these bonds, is important to ensure sufficient visibility of funding and clear obligations for utility companies such as AEML.”

The notes received investment-grade ratings from Fitch, S&P and Moody’s, and were offered to investors within and outside the US pursuant to rule 144A and regulation S under the US Securities Act, 1933, as amended.

The L&L team was led by partners Rohit Raghavan and Jitesh Shahani, and assisted by managing associates Satadru Goswami and Murtaza Zoomkawala, associates Kavya Gupta, Rushab Dhandokia and Arya Devi, and paralegal Ritika Khare.