Wind turbine maker Suzlon Energy and its bankers are working on a debt restructuring programme to avoid the bankruptcy court for resolution. This is after talks for stake sale with potential buyers collapsed.
Chairman Tulsi Tanti told ET that the domestic wind energy market faces problems that have made foreign investors wary of investing, forcing the company to drop its stake sale plan to resolve debt issues.
“We were talking to two global investors to invest in Suzlon Energy. Unfortunately, because of the challenging business environment, they have decided not to go ahead with the investments,” Tanti said.
He said banks are working with the company on the debt restructuring plan as failure of the industry major may have a domino effect on the wind energy sector.
“Bankers realise that India cannot afford to lose a company which is the largest in its wind energy space. We are going to restructure the debt. The process is on right now. By the end of this month, we will finalise it,” Tanti told ET. He dismissed buzz that the company is headed to the National Company Law Tribunal, calling it “speculation.”
“Unfortunately, state utilities are not paying on time — almost Rs 16,000-18,000 crore is outstanding. The new chief minister of Andhra Pradesh has decided not to honour the old power purchase pacts, and is offering low prices that are not sustainable. That has shaken the confidence of financial investors to invest in the country,” Tanti said. He said the sector is also suffering due to delays in projects on issues relating to availability of site and infrastructure.
Suzlon has submitted a restructuring plan to the lenders, which will split its Rs 7,000 crore-debt into sustainable and unsustainable debt.
It is also in discussion with its foreign currency convertible bondholders for settlement of borrowing which includes a waiver of considerable amount.
Suzlon defaulted on loan repayments earlier this year and its loans were categorised as nonperforming assets by the lenders. In July, 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 ends 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 of 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 23% stake.
However, 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.
Source: Economic Times