Mumbai: Debt-laden wind turbine maker Suzlon Friday said its board has agreed to allot over 78 crore fresh shares, constituting about 32 percent of equity, worth about Rs 1,451 crore to banks as part of recent loan restructuring.
The company will issue shares to the lenders in two tranches. The first tranche of allotment on April 1 will constitute about 19 percent of equity and later in September 2014 another 13 percent, taking lenders' overall holding in Suzlon to a tad over 32 percent, a company spokesperson said.
The share allotment would be part of the world's fifth largest wind turbine maker's recent loan restructuring process under which debt worth Rs 9,500 crore was rescheduled.
The company has fixed the price for share issuance at Rs 18.51 per share, as per the Sebi norms regarding preferential allotment, which is the average price as of December 31, 2012, when the CDR was approved, the company said in an exchange filing.
The company will allot 78.37 crore shares (worth about Rs 1,451 crore) to the CDR lenders on a preferential basis towards their interest sacrifice during the first three years of the CDR. The lenders also have the option to opt for compulsorily convertible debentures.
The non-CDR lenders, on the other hand, will get a preferential allotment of 12.52 crore shares, aggregating to Rs 231.70 crore also at Rs 18.51 per share, which is the price arrived in terms of CDR regulations.
The first part of the preferential allotment involves CDR lenders getting around 42 crore equity shares by April 2013, and the rest by September 2014.
After the first lot of allotment, which is subject to shareholder approval, the total equity base of Suzlon will increase to Rs 219 crore from the current Rs 177 crore, and to Rs 291 crore by September 2014, the company said.
The Suzlon counter closed at Rs 16.85 on the BSE Friday, when the main gauge rallied a full 1.4 percent or 270 points. Suzlone stocks are trading as much as 97 percent below its life-time high of Rs 459.85, peaked in early 2008, when the global wind energy sector was booming.
For the December quarter, Suzlon reported a massive 303 percent increase in consolidated net loss at Rs 1,154.53 crore as its revenue contracted to Rs 4,013.66 crore.
The preferential allotment will improve leverage position in terms of debt-to-equity ratio, the Pune-based Suzlon said.
On January 24, Suzlon had said its lenders, comprising as many as 19 banks led by State Bank of India, had agreed to restructure Rs 9,500-crore of domestic debt.
Under the CDR, the Tulsi Tanti-promoted company would get a 10-year back-ended repayment plan with a reduced interest rate, which effectively means a 3 percent savings on interest burden apart from a two-year moratorium on principal and term-debt interest payments and also a fresh working capital loan of Rs 1,800 crore.
The CDR also involved the promoters bringing in Rs 250 crore of fresh equity.
The State Bank is the consortium leader and the CDR plan has been drafted by SBI Caps. SBI has Rs 3,500-crore exposure to the company which had Rs 14,568 crore worth rupee debt as of Q2.
The other key 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.
On equity allotment, Chief Financial Officer Kirti Vagadia said, the move is a key step towards improving the financial health of the firm and will help improve its leverage position in terms of our debt-to-equity ratio by the middle of next month.
"We believe that by our lenders taking an equity position, in addition to providing critical financial support, is an important signal of their confidence in our fundamental viability as a business, and our long term outlook.
"Along with the other enabling resolutions around acquisition of outstanding shares in a subsidiary and approval for sale of undertakings, these steps will help us realise greater efficiencies and continue to normalize our business," Vagadia said.
Suzlon, present across Asia, Australia, Europe, Africa and the Americas, has an installed capacity of over 21,000 mw spanning 32 countries.