Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

India's Suzlon defaults on bond payment, sources say it's in talks to sell stake

Published 2019-07-16, 10:27 a/m
Updated 2019-07-16, 10:30 a/m
© Reuters.  India's Suzlon defaults on bond payment, sources say it's in talks to sell stake

© Reuters. India's Suzlon defaults on bond payment, sources say it's in talks to sell stake

* Suzlon says defaulted on a $172 million bond payment

* Seeks to sell majority stake to resolve debt crisis - sources

* Has submitted a one-time settlement plan to its lenders

By Promit Mukherjee

MUMBAI, July 16 (Reuters) - India's debt-laden Suzlon Energy SUZL.NS said it defaulted on a $172 million bond payment on Tuesday, as sources aware of the matter said the wind power equipment maker was in talks with several global private equity funds to sell a majority stake.

The company's creditors, led by India's biggest lenders State Bank of India SBI.NS , last week signed a so-called inter-creditor agreement (ICA) under which they had agreed not to take the company to a bankruptcy court.

Instead, they are studying a one-time settlement plan offered by the company, said the sources, who asked not to be named as they were not authorised to discuss the matter publicly.

It was not immediately known whether the ICA included the company's bondholders or not.

The western India-based company said it had not paid $172 million on an outstanding foreign currency convertible bond (FCCB) that was due on Tuesday.

"The company is working on a holistic solution for its debt and continues to be in discussions with various stakeholders in relation to its outstanding debt (including the bonds)," it said in a statement.

The company's shares fell more than 4% to close at 4.60 rupees on Tuesday, compared with a 0.6% rise in the broader Nifty index .NSEI .

SBI's creditors "have sent feelers to all major private equity firms and are talking to some similar sized private equity firms such as Brookfield", said one of the sources, a Mumbai-based banker.

He said these included a U.S.-based private equity major, but refused to identify the firm.

SBI and Suzlon did not immediately respond to emails seeking comment.

Bloomberg reported last Thursday that Canadian company Brookfield Asset Management Inc. BAMa.TO planned an offer for a majority stake in Suzlon and was talking to the firm's creditors to restructure its outstanding bank loans. once a shining star in India's renewable energy space, is struggling with debt of over 110 billion rupees ($1.6 billion).

The company had restructured FCCBs worth $485 million in 2014 at a conversion price of 15.46 rupees a share. Over the course of the last five years most of the FCCBs were converted into equity barring the $172 million tranche.

"Since the company's share price has been in single digits for over a year now, FCCB holders are not keen to convert their debt into equity," said the banker.

($1 = 68.7100 Indian rupees)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.