Shapoorji Pallonji Group-backed Sterling and Wilson Renewable Energy Ltd (SWREL) is planning an equity share sale to raise up to ₹1,500 crore ($20.25 million) with the aim of repaying its maturing debt within the current fiscal year, according to insiders.
The move follows the invocation of two bank guarantees (BGs) totaling ₹390 crore (approx. $5.28 million) by overseas clients of SWREL's subsidiary, Sterling and Wilson International Solar FZCO. The clients alleged improper execution of a project, leading Sterling to claim wrongful invocation and subsequently initiate legal action against them. As SWREL had extended corporate guarantees towards these BGs, issued by Emirates National Bank of Dubai, it is obligated to repay ₹390 crore by October 2023.
SWREL is in discussions with Emirates NBD to convert the non-funded obligation into a fund-based obligation or term loan, which would increase the company's liabilities but provide some financial relief. Neither Emirates NBD nor Sterling and Wilson have commented on this matter.
The fundraising initiative aims to make SWREL a debt-free company, potentially improving its valuation. The company currently has a market cap of ₹7,003 crore ($948 million), with shares closing at ₹369 ($1 = INR83.125) on Wednesday, down 1.72% from the previous day on the Bombay Stock Exchange.
According to a report by India Ratings Research dated August 3, 2023, SWREL had free cash and cash equivalents of ₹63 crore ($8.52 million) as of June 30, 2023. It had availed ₹1,500 crore in additional debt during FY23, with a significant portion due in FY24. The company has scheduled principal payments of ₹1,090 crore in FY24, ₹370 crore in FY25 and ₹220 crore in FY26.
The same report highlighted that the invocation of BGs would further strain the company's liquidity position. Despite this, SWREL's order book remained at 'healthy levels' of ₹4,900 crore ($663 million) on June 30, having secured two projects worth ₹4,700 crore ($636 million) in the first quarter of this financial year in Rajasthan and Uttar Pradesh.
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