Troubled wind energy turbine maker Suzlon Energy on Thursday got a two-year interest holiday from its lenders. Under corporate debt restructuring (CDR), a consortium of 19 lenders restructured Rs 9,500 crore of its Rs 13,000-crore net debt.
The CDR process was triggered after Suzlon defaulted on its foreign currency convertible bonds (FCCBs) worth $221 million (Rs 1,189 crore) in October 2012. The CDR approved on Thursday is effective as on October, the same month of the default.
As many as 19 lenders in a consortium approved a revival plan that includes interest rates lower by three per cent, two-year moratorium on principal, term-debt interest payments, and six-month moratorium on working capital interests. The company was also given a 10-year door-to-door back-ended repayment plan, which means that the total loan exposure has been spread over the next ten years.
According to the package, interest worth Rs 1,500 crore will be converted into equity or equity-linked instrument over the next two years. The company has a market capitalisation of Rs 3,208 crore.
The promoters of Tulsi Tanti-founded company will have to bring in Rs 250 crore as equity in a stipulated time frame. Of this amount, Rs 62 crore was already infused in December 2012.
In the details provided by the company, there was no mention about the possibility of the firm having to exit or go ahead with a stake sale of its German subsidiary, REpower.
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A senior public sector bank executive said that according to the conditions of the package, the company has to exit some non-core assets. “The promoters will also have to pledge their stake, and give personal guarantees,” the banker added.
According to him, the business plan of the company has been reworked under the revised package. “The company has good order book position. As it executes orders, its cash flows will improve to service the debt repayment obligations over period,” he added.
Kirti Vagadia, chief financial officer of Suzlon Energy, said he was confident the company would return to stability with this package, and win back the confidence of its customers, lenders and employees.
The package also includes an enhancement of the company’s working capital facilities by Rs 1,800 crore. Suzlon believes it will help accelerate the execution of its order book, which was at around Rs 37,290 crore, at the end of the second quarter.
“This clearly underscores the fundamental viability of our business, and is a major step forward in our efforts to achieve a sustainable capital structure. The terms of the package are key enablers towards normalising our business,” said Vagadia in a press release.
He added that the company will continue to be in dialogue with its bond holders. “This development will help provide further visibility towards finding a consensual solution at the earliest,” said Vagadia.
Suzlon’s stock went down by 3 per cent in on Thursday’s trade to close at Rs 18 per share, according to data available on the Bombay Stock Exchange.