Suzlon Energy gets lenders nod for Rs 9,500 cr CDR plan
Mumbai: Wind energy major Suzlon Thursday said its lenders, comprising 19 banks led by the SBI, have approved its proposal to rejig Rs 9,500 crore of domestic debt, providing a big relief to financially troubled company.
"The empowered group of corporate debt restructuring (CDR) cell comprising 19 lenders Thursday formally approved our CDR proposal to recast Rs 9,500 crore of domestic debt. The package is effective from October 1, 2012 and does not include our foreign currency debt," Suzlon said in a statement.
The Tulsi Tanti-promoted company further said, the CDR proposal involves a 10-year door-to-door back-ended repayment plan with a reduced interest rate, which effectively means a 3 percent savings on interest burden for the company.
The proposal also involves a two-year moratorium on principal and term-debt interest payments, apart from a fresh working capital loan of Rs 1,800 crore, which will have a six-months interest moratorium, which is aimed at helping the company accelerate execution of its strong order book.
During the course of the two-year moratorium, interest worth Rs 1,500 crore will be converted into equity, the company said.
The Pune-headquartered company further said that the package also includes promoters bringing in Rs 250 crore of fresh equity, of which Rs 62 crore was infused last December.
"This approval clearly underscores the fundamental viability of our business," Kirti Vagadia, Chief Financial Officer Suzlon Group.
SBI is the consortium leader and the CDR plan has been drafted by SBI Caps. SBI has a Rs 3,500-crore exposure to the company.
Suzlon was looking at recasting Rs 11,000 crore of its Rs 14,568 crore domestic loans (as of the September quarter). This debt is four times its equity. It sought the debt restructuring process during late October.
The other main lenders include IDBI Bank, Bank of Baroda, Axis Bank, Punjab National Bank, Indian Overseas Bank, Central Bank of India, Yes Bank, and State Bank of Bikaner & Jaipur, among others.
Most of these loans, which are fully-secured, were availed of in the past two-and-a-half years and are being serviced at about 14 percent interest. Post-CDR, the effective interest will be around 11 percent.
The market appeared to have ignored the development and Suzlon scrips tanked nearly 3 percent to Rs 18.05 on the BSE, whose main gauge slipped by 0.51 percent or 103 points.
Suzlon stocks traded at as much as 95 percent below its all-time high of Rs 459.85, peaking in early 2008, when the global wind energy sector was booming.
Suzlon is the latest big domestic company to get CDR approval. Already, the number of CDR cases have crossed 100, totalling around Rs 70,000 crore this fiscal.
Recently, an RBI committee had proposed that banks make higher provisions against restructured loans and as part of the proposal, the apex bank had on October 30 credit policy upped the provision to 2.75 percent from 2 percent.
In two years, the central bank wants all such loans declared non-performing.
Early last month, overseas bondholders of Suzlon rejected a four-month repayment extension the company had sought.
A company official said the company has an order book of USD 6.8 billion as of now and has an installed capacity of 20,000 mw and 5000 mw under installation.
The company, which is yet to declare its Q3 numbers, had reported higher losses at Rs 807.74 crore in the September quarter, against a Rs 48-crore net profit a year ago, as adverse market conditions and capital allocation issues pushed the wind turbine maker into the red.
However, its consolidated income had risen to Rs 5,784.39 crore in the quarter, from Rs 5,154.45 crore a year ago.
On a standalone basis, Suzlon's loss stood at Rs 546.33 crore for that quarter, up from Rs 19.39 crore a year ago, while stand alone income fell to Rs 735.34 crore from Rs 2,029.41 crore in the same period a year ago.
Vagadia said: "The terms of the package include enhanced working capital facilities, a reduction of interest rates of nearly 3 percent, and conversion of interest costs into equity, are key enablers towards normalising our business".
"I am confident that with this CDR package, we will quickly return to a position of stability and confidence for our customers, vendors and employees," he added.
On the defaulted foreign bond issue, he said "We are in constructive dialogue with the majority of our bondholders across all four series, and this development will help provide further visibility towards finding a consensual solution at the earliest".
Last October, the company had defaulted on a USD 221 million foreign currency convertible bond redemption.
Suzlon Group is the fifth largest wind turbine supplier in the world, in terms of cumulative installed capacity.
The company is present across Asia, Australia, Europe, Africa as well as North and South America, with over 20,000 mw of installed capacity across 32 countries. It employs around 13,000 across these geographies.