Suzlon seeks more time for foreign bond repayment

Post market close on Friday, Suzlon Energy announced that its Foreign Currency Convertible Bond (FCCB) holders will meet on June 11 to provide extension for the company’s repayment of debt.

Suzlon’s $200-million zero coupon convertible bonds and $35-million 7.5-per cent FCCBs fall due in June. It will now seek extension up to July 27. The company has stated that this will enable it to complete documentation work to raise up to $300 million from its consortium of banks.

About 18 banks which are part of the consortium are expected to offer fresh dollar-denominated loans to the power equipment maker.

IMPACT

Such loans, if extended, will help Suzlon Energy in two ways.

One, it will give the company breathing space on its impending debt obligations. For how long this would be will depend on the tenor of the new funding facility.

Two, this may also put to rest market rumours of the company being required to sell its German subsidiary, REpower, to meet its debt liabilities.

REpower, an offshore wind equipment specialist, has added much strength to both Suzlon’s consolidated order book as well as its balance sheet. Had Suzlon been forced into a corner to sell this asset before reaping any benefits from the same, it would have negatively impacted market sentiment.

Suzlon Energy had garnered about $40 million cash by selling non-critical assets such as wind farms. This together with the likely fresh funding facility, may help it mitigate its current financial distress.
Source: BL

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