Suzlon to raise $2.8b in refinance by Jan

By Manju AB Dec 14 2009 , Mumbai

Wind energy turbines maker Suzlon Energy is negotiating refinance of Rs 11,000 crore

to consolidate all its debt under a single facility. IDBI Bank and State Bank of India (SBI), who are the lead arrangers, will chip in with more than a third of this refinance facility, bankers involved in the transaction said.

Suzlon chairman Tulsi Tanti told Bloomberg in Copenhagen, where the global climate change summit is on, that the company plans to clinch the $2.8 billion refinancing by the end of January. Another 25 banks will join the group, Tanti said on Sunday.

“As part of the restructuring there could be a debt moratorium, maybe for two years, which will give Suzlon some breathing space,” said Bhargav Buddhadev, a Mumbai-based analyst at brokerage Noble Group, who has a ‘positive’ rating on the stock told Bloomberg. “The bankruptcy concerns people had will be removed. It will act as a positive trigger for the stock.”

Financial Chronicle contacted Suzlon’s chief operating officer Sumant Sinha, who too is in Copenhagen declined to comment.

The refinancing will be a mix of foreign currency loans of $900 million to $1 billion and rupee loans of approximately Rs 7,000 crore. The refinance will be a single credit facility meant to retire all current long-term, short-term and working capital loans.

The company is negotiating with banks for a two-year moratorium on repayments and relaxation of covenants across facilities. This will help the company to streamline and consolidate security structure under one common syndicate.

SBI has already committed to Suzlon $500 million in foreign currency loan from its international book. The bank will also extend a rupee credit, which will be finalised once the Indian consortium is tied up.

“SBI would give a foreign currency loan of $500 million to refinance Suzlon’s short-term commitments that the company got into while acquiring Hansen Transmissions,” said a senior SBI official.

At the end of the second quarter, the company had net debt of Rs 12,525 crore. Of this, acquisition loans were about Rs 3,097 crore, foreign bonds of Rs 2,304 crore, capital expenditure loans of Rs 1,143 crore and working capital loans of Rs 5,758 crore. It also has loans from a promoter company of about Rs 1,175 crore.

The fresh line of credit is expected to retire the short-term debt that is coming up for repayment and get into debt of longer maturities, provide interim cash flows for operations and create additional lines for operational requirements, according to bankers.

The Ahmedabad-based company, which scrapped a rights offer last year when markets tumbled, is reworking its debt taken to acquire 91 per cent of Hamburg-based Repower Systems AG after orders slowed because of the global recession.

Suzlon has been gradually selling its stake in Hansen. Last month it sold 35 per cent of Hansen holding for $370 million, following an earlier sale of 10 per cent in a private equity deal worth about $127 million.

Tantis of the Pune-based Suzlon have ambitions of establishing a global wind turbine powerhouse. But high debt of the company and the global slowdown have affected the fund flows.

Suzlon and its units reported sales of Rs 26,080 crore ($5.6 billion) in the year ended March 31.

Suzlon’s loss widened to Rs 356 crore in the three months ended September 30 from Rs 130 crore a year earlier.

Suzlon fell 0.7 per cent to Rs 82.55 at close on Monday. The stock has gained 33 per cent this year, lagging behind the 77 per cent rise in Sensex.

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