Adani Transmission's Acquisition of Reliance Infrastructure's Assets Rating Neutral

Adani Transmission's (ATL) proposed acquisition of Reliance Infrastructure's three operating transmission assets is unlikely to impact the rating on its debt facilities, says India Ratings and Research (Ind-Ra).

The three operating transmission assets proposed for acquisition benefit from the revenue sharing mechanism applicable for interstate assets, which is implemented by the Central Transmission Utility (Power Grid Corporation of India). The acquisition would decrease the counterparty concentration in consolidated ATL's assets, since Maharashtra based utilities contribute between 60% and 65% of ATL's consolidated revenue presently. Ind-Ra would review the final terms of acquisitions and also any future investments.

The rated debt under the obligor group is protected by a waterfall mechanism, whereby cash flows from the operating assets under Adani Transmission India and Maharashtra Eastern Grid Power Transmission Company are first available for servicing the rated debt before being invested in new projects or used for any other purpose, after complying with the defined financial covenants.

ATL has signed a binding term sheet with Reliance Infrastructure for acquiring the assets and expects to complete the transactions by 1QFY18, subject to statutory and regulatory approvals.

ATL's outstanding ratings are as follows:

- INR35.8bn non-convertible debentures: 'IND AA+'/Stable

- INR12bn commercial paper (outstanding INR9.25bn): 'IND A1+'

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