Suzlon Energy looks to pare debt by Rs 583.5 crore after rights issue

Targets repaying remaining debt in eight years; Rs 1,200 crore opened on Tuesday

Suzlon Energy Chief Financial Officer (CFO) Himanshu Mody said on Tuesday that the company would be able to pare its debt by Rs 583.5 crore, if its rights issue worth Rs 1,200 crore, gets fully subscribed. Suzlon’s rights issue opened on Tuesday.

Mody also said that the company was looking to repay its remaining debt in eight years.

“The total debt of the company was Rs 3,200 crore as of June 30, 2022. The proceeds of the rights issue in the first phase would be Rs 583.5 crore assuming full subscription. This will be repaid to lenders. The company will be able to pay the remaining debt in the next eight years," Mody said in a virtual briefing on Tuesday.

The company will issue up to 2,400 million partly paid-up equity shares at an issue price of Rs 5 per share aggregating to Rs 1,200 crore.

Suzlon promoters and promoter group have confirmed their participation and they will be fully subscribing to the extent of their rights entitlement, Mody said.

Last week, Dilip Shanghvi, the founder of Sun Pharmaceuticals, had conveyed to the promoters of the company his intentions to fully participate in the firm's rights issue.

Shanghvi had bought a 23 per cent stake in Suzlon for Rs 1,800 crore in 2015, helping the company to return to profitability after it became India’s largest convertible-bond defaulter in 2012.

The Tanti-led promoter group, which includes members of his family and siblings, collectively hold 14.5 per cent in the company after lenders converted some loans into an equity holding in the company as a part of a debt restructuring plan. 

Inga Ventures is the lead manager to the issue.

Mody said that the company would have a much leaner balance sheet after the issue and there would be no decline in the promoters' holding after the rights issue.