Lenders approve debt recast plan of Suzlon

The Hindu :MUMBAI, January 25, 2013 

In a major respite for debt-laden wind energy firm Suzlon Energy, its lenders have approved a corporate debt restructuring (CDR) plan for Rs.9,500 crore, providing a new lease of life for the Pune-based company.

The package includes a two-year moratorium on principal and term-debt interest payments; a three per cent reduction in interest rates; and six months moratorium on working capital interest.

As part of the package, Rs.1,500 crore, which is two years interest payment during moratorium, will be converted into equity or equity-linked instrument over the next two years to bring stronger financial stability.

REPAYMENT PLAN

Suzlon has also got a 10-year repayment plan. The lenders have also agreed to provide enhanced working capital facility to the tune of Rs.1,800 crore, which will allow the troubled wind turbine maker to accelerate the execution of the order book.

The promoters have been asked to bring in equity to the tune of Rs.250 crore into the company within a stipulated time-frame.

Out of this, Rs.62 crore has already been infused, the company said.

The approved CDR is effective from October 1, 2012.

“This approval clearly underscores the fundamental viability of our business. This is a major step forward in our efforts to achieve sustainable capital structure,” said Kirti Vagadia, Chief Financial Officer, Suzlon Group.

“The terms of the package….are key enablers towards normalising our business. I am confident that by this CDR package, we will quickly return to position of stability and confidence for our customers, vendors and employees,” Mr Vagadia added.

“Additionally, we will continue to be in constructive dialogue with majority of our bond holders across all the four series, and this development will help provide further visibility towards finding a consensual solution at the earliest,” he added.

$200 MILLION DEFAULT

In October last, the company had defaulted a $200 million (about Rs.1,100 crore) convertible bond redemption due to severe liquidity problem eroding its credibility among investors. Suzlon is the world’s fifth largest wind turbine maker. Suzlon Group said that its long-term strategic plan for realising synergies from its REpower remains unchanged.

SBI and Suzlon...3500 crs debt

 PTI : 11 th Oct 2012


State Bank of India  , which has a Rs 3,500-crore of fund and non-fund based exposure to Suzlon Energy  , today said the Pune-based wind power major should look at leveraging the balance-sheet of its German subsidiary RE Power, and a merger.

"Suzlon needs to leverage the RE Power balance sheet and probably in the long-run, merge these two operations. Because when they merge, the profitability of the whole group can go substantially higher using low-cost of production here," SBI deputy managing director, large corporates, Santosh B Nayar told reporters here
.

Noting that RE Power is practically debt-free and has got huge cash pile, he said the German arm is also ring fenced by German banks. SBI is lead banker to Suzlon's Rs 14,000-crore debt. The Pune-based company is also reportedly pitching for a debt recast, but SBI has ruled it out in the short-term.

"We will have to discuss with the company on CDR; we will have to look at their cash flows now and we will see what needs to be done and also see what are the assets which can be monetized," Nayar said.

Earlier in the day, Suzlon said its bondholders rejected its proposal to defer redemption of its foreign debt worth USD 221 million by four months, making it one of the largest defaults by a domestic firm. The Tulsi Tanti-promoted company has foreign currency convertible bonds (FCCBs) worth USD 220.8 million (about Rs 1,172 crore) maturing today and the company was hoping to get bondholders' nod for more time to repay.

Following the development, Suzlon shares fell over 3 per cent to Rs 16.05 on the BSE. "It is somewhat disappointing that the bondholders' meetings did not achieve the consensus we were hoping for and the four-month extension sought by us has not been granted," Suzlon Group chief financial officer Kirti Vagadia told PTI.

Nayar further said the current default by Suzlon is not very big when one looks at the company's total debt profile. But the real problem can be from the fact that the company will have to negotiate with other bondholders and arrive at a settlement, which could impact its cash flow, he said.

Noting that the company has got a very large order book (over USD 7.2 billion), he said wind energy is a field where a lot of investors are interested. If the finances are set right, Suzlon could attract other investors. Many domestic companies including Suzlon have raised money through FCCBs. In recent times, Suzlon has been grappling with rising debt and stiff competition in global markets.

Suzlon had issued USD 200 million zero coupon convertible bonds and USD 20.8 million 7.5 per cent convertible bonds. The company on September 18 had sought extension them. The bondholders' meeting was held in London yesterday.

"We did not have enough quorum (of bondholders) with respect to the zero coupon convertible bonds while the response was not positive when it came to those holding 7.5 percent convertible bonds," Vagadia said. The company had redeemed FCCBs to the tune of USD 360.2 million this July.