Germany-based Senvion SE (formerly REpower), a wholly-owned subsidiary of the Suzlon Group, has secured €850 million as working capital finance from a consortium of 14 banks headed by BayernLB, Commerzbank Aktiengesellschaft and Deutsche Bank AG.
The credit facility, an agreement for which was signed in March, is for a three-year period ending March 2017.
Senvion has been receiving working capital finance for the last five years. It received €650 million during the first three years, and a consortium of 11 banks gave it a credit of €750 million for the period from May 2012 to August 2014.
The agreement enables Senvion SE secure follow-on financing early.
Suzlon acquired the erstwhile REpower, considered a marquee asset, in 2008-09. The deal was valued at ₹9,000 crore, and the capital as well as interest paid thereof account for a significant part of the parent’s consolidated debt, which is today estimated at ₹13,000 crore.
While Suzlon does not disclose the turnover of its independent profit centres, according to an analyst, Senvion has a turnover of €1.6 billion, is debt-free and has cash reserves of nearly €275 million on its books.
Today’s deal, interpreted as a show of confidence by banks, is especially significant as Suzlon’s financial track record and balance sheet are not seen to be particularly healthy in India, the analyst added.
Also, finance for working capital in Europe comes at 3-4 per cent, substantially lower than the 10-12 per cent in India.