Suzlon stares at $172 mn FCCB repayment in July; explores funding options

Wind power solutions provider Suzlon Energy will need to pay another $172 million towards its foreign currency convertible bonds (FCCB)s due in July this year. While, there are concerns on the company’s debt repayment schedule, the company reiterated it is making progress on its strategic initiatives.

According to Bloomberg data, Suzlon has an FCCB worth $172 million up for repayment in July. 

Media reports on Monday suggested that talks with Vestas Wind Energy for a stake purchase in Suzlon had failed. "We do not comment on specific discussions with any specific party at this point. We shall ensure necessary disclosures at the appropriate time,” the company said in a media statement on Monday.

On its impending FCCB payment, the company said, "We have been exploring various funding options like raising fresh equity, disposal of subsidiaries, etc. We have been engaging with various experts, consultants and advisors in this regard, including FCCB holders. We shall ensure necessary disclosures at the appropriate time.”

CARE Ratings in April downgraded Suzlon’s Rs 16,185.46 crore worth debt to a default rating. “The ratings assigned to the bank facilities of Suzlon Energy takes into account the on-going delays indelays/defaults in debt servicing on the loans rated by CARE resulting from stretched liquidity position,” the agency said in its note. It added, “This has been on account of impaired volumes resulting from wind industry’s transitionary phase and delay in monetization of assets.”

In a February 2019 note, the rating agency noted, “July 2019 series has conversion terms of Rs.15.46 per share and exchange rate of 1$ for Rs 60.225 which is higher the current market price is Rs. 3.63 as on February 5th, 2019. Considering the current market price as opposed to the conversion rate, redemption of the FCCBs will be challenging.” Out of the total FCCBs of 

$547 million, Suzlon had converted FCCBs of $375 million till December 30th, 2018. With this, the remaining FCCBs are worth $172 million, the redemption of which is due in July 2019. The note added, “Further, with already tight liquidity position the company would find it challenging to redeem its FCCB due in July 2019; if not converted.”

For the quarter ended March 31, 2019, the company reported a loss of Rs 294.64 crore, lower than the Rs 469.85 crore loss reported in the same period a year ago.