Mumbai/New Delhi: In an eventful day for Suzlon, its bond holders Thursday said no to extending redemption time, while lead lender SBI suggested merger of its German arm REpower with the parent to improve group profitability.
SBI's suggestion came close on the heels of bondholders' rejecting Suzlon's proposal seeking four-month extension to repay debt worth nearly USD 221 million that were due Thursday.
State Bank of India, which has a total exposure of Rs 3,500 crore to Suzlon, said the entity should look at leveraging the balance-sheet of its German subsidiary REpower.
"Suzlon needs to leverage the REpower balance sheet and probably in the long-run, merge these two operations. Because when they merge, the profitability of the whole group can go substantially higher using low-cost of production here," SBI Deputy Managing Director (Large Corporates) Santosh B Nayar said in Mumbai.
When asked whether there is a loan recast proposal for Suzlon, he said it would have to discuss various options with the company.
"We will have to discuss with the company. We will have to look at their cash flows now and we will see what needs to be done and also see what are the assets which can be monetised," Nayar said.
According to SBI, which leads the consortium of lenders, Suzlon has a debt burden of about Rs 14,000 crore.
The bondholders, during a meeting in London Thursday early morning, rejected the proposal for extending time to redeem Foreign Currency Convertible Bonds (FCCBs).
The company has foreign currency convertible bonds (FCCBs) worth USD 220.8 million (about Rs 1,172 crore) maturing Thursday and the company was hoping to get bondholders' nod for more time to repay.
"It is somewhat disappointing that the bondholders' meetings did not achieve the consensus we were hoping for and the four-month extension sought by us has not been granted," Suzlon Group chief financial officer Kirti Vagadia told PTI.
Suzlon had issued USD 200 million zero coupon convertible bonds and USD 20.8 million 7.5 percent convertible bonds. The company on September 18 had sought extension them.
After shedding nearly five percent in morning trade, shares of Suzlon pared losses and closed at Rs 16.20, down 2.11 percent on the BSE.
In recent times, Suzlon has been grappling with rising debt and stiff competition in global markets.
The company, however, had redeemed FCCBs to the tune of USD 360.2 million this July.