Suzlon up on talks with FCCB holders

Shares gain as much as 6.5% in today's trade, close at Rs 12

Suzlon Energy’s shares rose as much as 6.5 per cent on Tuesday and closed at Rs 11.69 on the BSE, after reports of the company reaching a settlement with bondholders over its 2012 default.

“We will reach a settlement with the foreign currency convertible bond (FCCB) debtors in the next two to three days,” said a person close to the development, on condition of anonymity. The company had defaulted on a $200-million FCCB bond payment in late 2012. The wind energy turbine maker later had its debt of Rs 9,000 crore restructured.

Suzlon refused to comment on the development. The contours of the likely settlement are unclear. The total payment to FCCB debtors, including future payments, could be up to $500 million and a settlement for the entire amount might be done at one go.

“This proposed agreement with FCCB holders indicates that the deep financial recast package is working. The turnaround is happening but much business expansion depends on the economic conditions in target markets — Europe and North America,” said a senior State Bank of India executive. State Bank of India is the lead banker to Suzlon.

Suzlon has been facing many headwinds like slowdown in the power equipment market, both globally and in India where domestic construction activity has come to a stand-still in the last two years. Added to this, Suzlon had acquired German equipment company REpower. In spite of acquiring the entire company, tough German laws had restricted the company from transferring the free cash in the company, leading to more troubles.