Rs 10k-cr Suzlon debt recast package on cards

Package could be taken up by corporate debt restructuring cell in Dec

Lenders are close to firming up a restructuring package for loans worth about Rs 10,000 crore to financially stressed Suzlon Energy Ltd.

A senior public sector bank executive said the lenders are negotiating with the Tulsi Tanti-promoted company on the terms — interest rate concession, a two-year payment moratorium, extended repayment period and fresh working capital support.

The package is likely to be taken up at a meeting of the corporate debt restructuring (CDR) cell members early next month. The banks with significant exposure include State Bank of India, IDBI Bank, Bank of Baroda, Punjab National Bank and Axis Bank. SBI Caps, capital market subsidiary of State Bank of India, the lead lender, was involved in framing the package’s terms.

PROPOSED TERMS

• The restructured debt to carry 11 per cent rate
   
• Two-year repayment moratorium
   
• Fresh Rs 500 crore working capital support
   
• Banks take Rs 750 crore haircut
   
• Promoters to infuse Rs 250 crore

The estimated hit the banks will take on account of reduction in interest rate for the revised package is Rs 1,000 crore. The proposal calls for the promoters putting about Rs 250 crore, partly mitigating the lenders’ sacrifice.

In October, Suzlon defaulted on redemption of foreign currency convertible bonds worth $220 million, after bond holders rejected a request for extension.

Another banker dealing with the CDR package said the FCCB exposure was not part of the debt recast terms but it factored in the financial obligations on the company.

Besides domestic loans, some Indian lenders having branches abroad face an additional FCCB burden. They have issued credit-linked notes (CLNs), a sort of credit insurance on the FCCBs. So in the event of a default by the company in making payment, the CLN issuers would have to pay.

The wind energy turbine maker reported a consolidated loss of Rs 808 crore for the second quarter, amidst the challenges of debt restructuring and a weak macro-economic outlook. It had posted Rs 48-crore profit in the same period last year.

Revenue rose 11 per cent to Rs 5,702 crore from Rs 5,131 crore in the same period last year but raw material costs and interest costs rose sharply, resulting in a loss.