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Suzlon board okays debt rejig plan to convert loans to equity

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Mumbai: Beleaguered-Suzlon Energy's board has approved a debt restructuring plan that will entail issues of shares, other instruments and divestment of assets, the company informed the bourses late Thursday.

The wind turbine maker also passed an enabling resolution for conversion of loan and debentures into equity.

It did not disclose the quantum of the debt that would be converted.

"The board has approved the company’s proposal for restructuring of debt of the company and its certain identified subsidiaries formulated under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 issued by Reserve Bank of India vide its circular dated 7th June 2019," the company said in the statement.

The company will issue to its lenders up to 100 crore equity shares, up to 410,000 0.01% secured optionally convertible debentures of Rs 100,000 each, and up to 50 crore warrants of Rs 1 each. Separately, the board also approved an enabling resolution to issue shares or equity linked instruments Rs 1,000 crores, which may be raised later if required.

Suzlon Energy said it has also received approval for sale of assets.

Suzlon will also issue equity or compulsory convertible debentures of the company on preferential basis to the promoters and some other entities worth Rs 400 crore.

Last year, Suzlon defaulted on loan repayments and its loans were categorised as non-performing assets by lenders.

In July 2019, Suzlon’s secured creditors signed an inter-creditor agreement to resolve the debt crisis by working with the company.

According to a central bank directive on June 7, such agreements must be signed within 30 days of the first default to any lender.

Banks have a 180-day window, which ended on January 6 to resolve the issue.

This was the second instance of a major default in the 24-year life of the Indian wind turbine maker.

In 2012, it had defaulted on FCCB repayment, the biggest of its kind at the time.

The bonds it defaulted on in July were, in fact, issued in exchange for one of the series on which it had defaulted at that time. In 2013, Suzlon underwent a corporate debt restructuring for its Rs 9,500 crore loans as it faced severe liquidity crunch and could not service debt.

In 2015, billionaire Dilip Shanghvi came in as a white knight, buying a 23% stake.

But the company’s problems persisted as the Indian government rolled back incentives to the wind energy sector, the market shrank and competition intensified even as debt remained high.




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