Suzlon Energy set to get Rs 400-cr infusion through various securities

Tanti Holdings Private Limited (promoter), Shanghvi Finance Pvt. Ltd and associates will infuse capital in company

The promoters and associates of Suzlon Energy will infuse up to Rs 400 crore as equity into the troubled renewable energy company, through various securities as part of the proposed restructuring plan.
 
The entities pumping in money include Tanti Holdings Pvt (promoter), Shanghvi Finance and associates. 
 
The board of directors, in a late night meeting on Thursday, approved a proposal for restructuring debt of the company and its certain identified subsidiaries, the company said in its filing with the BSE. Suzlon’s stock closed 5.9 per cent lower at Rs 2.69 per share on the BSE on Friday.
 
Under the debt recast plan, the Tulsi Tanti-controlled entity will issue securities — shares, convertible bonds and warrants — to 17 lenders for converting part of the debt into equity. Some of the lenders include State Bank of India, Axis Bank, Bank of Baroda, ICICI Bank, IDBI Bank and YES Bank. The Pune-based entity will also dispose of some of its investment, assets and also dilute stake in some of the units in line with the approved plan. However, the company did not specify the assets it would sell to reduce stake.
 
The board also gave nod to a proposal to appoint Sameer Shah, a chartered accountant, as independent director of the company for a five-year term, commencing February 27, 2020. His appointment is subject to regularisation by the shareholders at the next annual general meeting.
 
On issuing securities to lenders, the company said it will give one billion shares of Rs 2 each. It will also issue 0.41 million secured optionally convertible debentures of Rs 1 lakh each and 500 million warrants of Rs 1 each.

 
Lenders and the company have hammered a restructuring plan under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019. They had inked an inter-creditor agreement (ICA) on July 1, 2019, and the standstill period under this expired on January 7, 2020. Lenders are in the process of executing the amendment agreement for extending the period under the ICA till April 30.
 
Its auditors, in a review report, said the company is facing a severe liquidity stress. Consequently, there is material uncertainty that may cast a significant doubt about the company’s ability to continue as a going concern.
 
The directors also gave nod to amending the Articles of Association, increase in authorised share capital and alteration of the Capital Clause of the Memorandum, it added.
 
They have also cleared the enabling resolution to issue equity shares/equity-linked instruments to an extent of Rs 1,000 crore. This step is to facilitate the company to issue securities at an appropriate time should that be required.
 
According to the auditors’ observations in the filing with the BSE, the company continued to incur losses during the current period, primarily due to lower volumes, finance costs, provision for impairment and negative net worth of Rs 9,407 crore as on December 31, 2019.
 
The net current liabilities in the standalone financial results were Rs 11,581 crore.
 
The company defaulted on repayment of loans (including foreign currency convertible bonds (FCCBs) of Rs 1,263 crore) and interest aggregating to Rs 7,682 crore, as on December 31, 2019.
 
It also defaulted in making payments to most of the trade creditors out of the total outstanding of Rs 1,149 crore as on December 31, 2019.
 
Some creditors have issued notices to the company under the Insolvency and Bankruptcy Code and few have filed insolvency proceedings against the company with the National Company Law Tribunal (NCLT).
 
During the quarter ended December 31, 2019, one of the lenders had recalled outstanding borrowings amounting to Rs 597 crore (as on December 31, 2019) from the company.