Calls off talks for domination pact with arm REpower, blames market condition.
Suzlon Energy, the world’s fifth largest wind turbine maker, said today that it has suspended its Rs 1,800 crore rights issue plan in view of the recent capital market environment.
| GONE WITH THE WIND |
Suzlon, in a statement to stock exchanges, said it’s also suspending negotiations to conclude a domination agreement with its major subsidiary REpower Systems. At present, Suzlon Energy has 66 per cent stake in the Germany-based firm.
“The decision for the suspension of the rights issue has been taken because of the current market conditions. But we have time till May next year to complete our stake buy in REpower to 90 per cent,” said a senior official of the company.
Last month, the company had announced its proposal of acquiring 22.48 per cent stake from Portugal-based Martifer SGPS in its subsidiary REpower Systems of Germany for €270 million (Rs 1,744 crore).
The stake buy is a part of Suzlon’s deal, which was signed two years ago, with French energy major Areva and Portugal’s real estate group Martifer – the two major shareholders in REpower at the time of its acquisition two years ago for €1.35 billion (about Rs 7,314 crore).
The deal was structured in such a manner that Suzlon would buy Martifer’s stake within two years for a price of €265-270 million. “The company may have to sell assets to fulfil its global expansion plan,” said an analyst with a foreign brokerage who did not wish to be quoted. The company has stake in gearbox-maker Hansen Transmission International NV, based in Belgium. Suzlon needs to buys Martifer’s stake before December 15.
In May, Tulsi Tanti, chairman and managing director of Suzlon, told Business Standard that the company had firmed up syndicated loans to fund the acquisition of Areva and Martifer shares, which required more than Rs 7,000 crore. Details on these loans were not known.
Suzlon is grappling with problems of cracking of its V2 blades. The company's blades cracked under certain wind conditions after which a unit of Southern California's Edison International cancelled an order for 150 turbines in June.
Under German corporate laws, Suzlon needed to acquire one more large block of shares and offer to buy out minority shareholders before it could transfer technology from the German company.
The shares of Suzlon closed at Rs 46.95 at the end of today’s trade on BSE, slightly higher than the 52-week low of Rs 42. Suzlon’s shares touched a 52-week high of Rs 2,300 on January 9 this year.
This could have helped the company resolve some of the technology-related issues.
A blade on one of the four wind turbines sold by Suzlon to AgriWind wind farm in Illinois broke off on October 22, pjstar.com reported. The blades on all four turbines on the farm were scheduled to be replaced next week, pjstar.com reported, citing an unnamed Suzlon official.
