Brookfield bids for Suzlon; offers one-time settlement for Rs 9,500-cr debt

Brookfield is making a bid for Suzlon Energy but would require 45 days to complete the due diligence, the company’s lenders were informed on Friday.

This would make it difficult for Suzlon to pay back the $172 million foreign currency convertible bonds (FCCBs), due on July 16, to its bond holders. 

Considering the current market price, FCCB holders will not convert bonds into equity and Suzlon will have to repay the principal, which will be challenging, said a source.

During a meeting held here between the bankers of Suzlon Energy and the company’s management, the company made a one-time settlement offer for its net debt worth Rs 9,500 crore from the proceeds of the sale. The banks have not taken a call on the offer as yet, said a source close to the development. 
 

The source said the current promoter Tulsi Tanti will continue but Brookfield will become the largest shareholder in the company.

The one-time settlement offer was made after the company defaulted to Indian lenders in the March quarter.

In fiscal 2013, Suzlon and its subsidiaries were referred to the corporate debt restructuring (CDR) cell of the Indian banks for restructuring its debt, considering the positive long-term outlook of the wind energy sector, and the package was approved by the CDR Empowered Group in December 2012. 

The approved CDR package was implemented by all CDR lenders on March 28, 2013. But the company’s condition did not improve and it continued to lose money. 

For fiscal 2019, Suzlon Energy suffered huge losses for fiscal 2019 with the losses at Rs 7,413 crore on revenues of Rs 2,543 crore.

In April, rating firm CARE downgraded the ratings assigned to the bank facilities of Suzlon Energy, stating that the ongoing delays/defaults in debt servicing on loans resulted from the stretched liquidity position. 

This has been on account of impaired volumes resulting from the wind industry’s transitionary phase and delay in monetisation of assets.

Bankers said of the total FCCBs of $547 million issued in 2013, the company had already converted FCCBs of $375 million till December last year. 

The remaining FCCBs worth $172 million has conversion terms of Rs 15.46 per share at an exchange rate of Rs 60.225 a dollar, which is higher than Suzlon's current market price of Rs 4.45 a share. 

On June 11, the company informed the stock exchanges that it was working on significant debt reduction, as committed. 

“Also, as a wholesome approach towards liability management, the company has been exploring various funding options like raising fresh equity and disposal of subsidiaries, among others. The company has been engaging with various experts, consultants and advisors in this regard, including FCCB holders,” it said.