Suzlon Energy, which recast its loans in January, is hitting the overseas bond markets to raise $650 million to prepay its forex debts, making it the first domestic company under CDR to do so, according to company and merchant banking sources.
The $650-million dollar-denominated bonds sale programme, beginning Monday, is necessitated by the fact that the recent Rs9,500-crore corporate debt restructuring (CDR) did not include the forex loans, a company source with direct knowledge of the development told the news agency.
The money will not flow into the company kitty but to the 19 member consortium of domestic lenders, sources said.
So, the bond sale is a part of the debt restructuring package announced on January 24 by beleaguered Suzlon Energy, the world’s fifth largest wind turbine maker.
The situation is unique as the company has just undergone a CDR and banks are ready to help the troubled company as they feel that it would be better for them to help Suzlon finance the $650-million worth of foreign bonds maturing over the next one year or so, loans at one go and not in instalments, say the sources.
The CDR also involved a two-year moratorium on principal and term-debt interest payments, apart from a fresh working capital loan of Rs1,800 crore with a six-month interest moratorium to help the company accelerate execution of its strong orderbook of around $7 billion.
During the two-year moratorium, interest worth Rs1,500 crore will be converted into equity, beginning next month, and by September 2104, banks will hold over 32 per cent in the company, according to the CDR package. According to a merchant banking source, Suzlon has forexfacilities worth $650 million with SBI and nearly a dozen other banks across the geographies wherever it operates.
The dollar-denominated bonds will have a five-year maturity and are backed by the lenders’ consortium, led by State Bank of India, through a letter of credit. SBI has an exposure of Rs3,500 crore to the Pune-based firm, said the merchant banking source.
In January, Suzlon convinced the bankers to recast its debt running into Rs11,500-crore loan bailout package under which Rs9,500 crore of its rupee debt had already been rescheduled.
Its other major lenders include IDBI Bank, which had lent around Rs1,700 crore to it, Bank of Baroda and Indian Overseas with Rs1,000 crore each.
Axis Bank, ICICI Bank, Punjab National Bank, Central Bank of India, Yes Bank, State Bank of Bikaner & Jaipur, Bank of India, State Bank of Patiala and Oriental Bank of Commerce among others have also lent to the troubled company, which is not facing severe cash crunch.
Suzlon was looking at recasting Rs11,000 crore of its Rs14,568 crore domestic loans (as of the September quarter). This debt works out to be four times its equity. It sought the debt restructuring process late October.
The CDR was approved after its forex bond holders had in October rejected its request to extend the deadline for repaying foreign currency convertible bonds (FCCBs) worth $221 million.
Merchant bankers also feel that despite being the issuing company near bankrupt, the bond sale will go through smoothly as it is being backed by SBI and other major lenders.
The Tulsi Tanti-promoted company has an installed capacity of over 21,000 mw and 5,000 mw under installation. PTI