Tuesday, May 21, 2013

Suzlon Energy Case: Lenders approve recast of suzlon's Rs 9,500-crore debt

MUMBAI: Loss-making wind turbine maker Suzlon Energy BSE 4.16 % said lenders, comprising 19 banks led by State Bank of India BSE 0.15 %, have approved its proposal to recast Rs 9,500 crore of debt.

As reported by ET on January 18, the banks have given Suzlon a two-year moratorium on principal and term-debt interest payments. They have also approved a fresh working capital loan of Rs 1,800 crore that will have a six-month interest moratorium, aimed at helping the company speed up execution of its strong order book.

The Tulsi Tanti-promoted company, which has been hit by huge debt and slowdown in business, has got bankers to approve a 10-year door-to-door back-ended repayment plan, with interest rates reduced by almost 300 basis points.

Bankers aware of the development told ET that the debt recast conditions require Suzlon to sell stake in some of its overseas subsidiaries such as the Germany-based REpower to raise capital. But Suzlon has steadfastly refused to sell stake in REpower, though it plans to sell some non-critical assets to raise funds. "The group's long-term strategic plan of realising deep synergies from REpower remains unchanged," Suzlon said in a release.

"This is a major step forward in our efforts to achieve a sustainable capital structure. I am confident that by this corporate debt restructuring package, we will quickly return to a position of stability and provide confidence to our customers, vendors and employees," Kirti Vagadia, chief financial officer, was quoted as saying in the release.

According to the debt recast plan, interest worth Rs 1,500 crore during the two-year moratorium will be converted into equity. Also, the promoters would have to infuse fresh equity worth Rs 250 crore, of which Rs 62 crore was infused last December.

Suzlon, which has piled up 14,000 crore in debt - almost twice its equity base - had posted losses for the past three years. Last year, the company defaulted on a $209-million foreign currency convertible bond repayment.

"We continue to be in constructive dialogue with majority of our bondholders across all the four series, and this development will help provide further visibility towards finding a consensual solution at the earliest," said Vagadia.
25 Jan, 2013, 08.36AM IST, ET Bureau

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