Loss-making wind turbine maker Suzlon Group today said it has started discussions with lenders for restructuring debt, including a two-year moratorium on repayment of term loans.
The development comes in less than three weeks after bondholders rejected its proposal seeking four-month extension to repay overseas debt worth about $221 million.
Currently, Suzlon has a debt burden of more than Rs 13,000 crore including Foreign Currency Convertible Bonds (FCCBs) obligations.
Without disclosing specific details, Suzlon in a statement said it has “initiated discussions with its senior secured lenders and plans to restructure its debt with a maturity period of ten years under the Corporate Debt Restructuring (CDR) mechanism”.
The wind turbine major has sought a two-year moratorium on principal and interest payments on term-debt.
Suzlon Group Chief Financial Officer Kirti Vagadia said the company has, in consultation with its senior secured lenders, taken the decision to undertake a debt restructuring exercise under the CDR mechanism.
“Our senior secured lenders are supportive of our long-term business plans, and our efforts to consolidate our overall debt to achieve a sustainable capital structure,” he noted.
Mounting debt and tough market conditions, amid sluggish global economy, have adversely impacted Suzlon’s business.
According to Vagadia, the move towards CDR is an important step towards stabilising its business by enhancing liquidity and injecting additional working capital.
“We believe this will help us to safeguard the interests of our key stakeholders, including customers and vendors,” he said.
Considering the current situation, the wind turbine maker said it has decided to suspend guidance for current fiscal.
”... we recognise that despite strong business fundamentals and a $7.2 billion order book, liquidity constraints over the first half of the fiscal, a volatile market environment, and the timeline of the CDR process will continue to impact performance,” the firm said.
Further, the company said discussions are continuing with bond holders regarding extension for repayment of FCCBs.
“Additionally, our ongoing engagement with our bondholders continues to be both constructive and progressive, and we expect that an acceptable solution for all stakeholders will be reached at the earliest possible date,” Vagadia said.
Earlier this month, one of Suzlon’s major lender State Bank of India (SBI) had suggested merger of its German arm REpower with the group to improve profitability.
SBI is estimated to have an exposure of about Rs 3,500 crore to Suzlon.