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State Bank of India approves Suzlon Energy’s debt revamp proposal

Its debt of Rs 12,700 crore will be converted into sustainable and unsustainable debt and repaid over 20 years

State Bank of India, Restructuring plan, Suzlon Energy, Wind power firm, Sustainable debt, Unsustainable debt, Non-convertible debentures, Compulsorily convertible preference shares, Suzlon Global Services, Manufacturing equipment for generating wind energy, Tulsi Tanti, Pune, Maharashtra

The State Bank of India (SBI) has approved a restructuring plan proposed by Suzlon Energy as the first step towards saving the stressed wind power firm.

Under the plan, Suzlon Energy’s debt of Rs 12,700 crore will be converted into sustainable and unsustainable debt and repaid over 20 years.

Sustainable debt, which is 32-35% of the total, will be repaid over the first 10 years, after which unsustainable debt, including non-convertible debentures and compulsorily convertible preference shares (CCPs), will be repaid. This will mean that lenders will have to take a haircut of 65% on the debt.

Lenders led by SBI will pick up 10% stake in Suzlon Energy immediately on issue of shares and 49% stake in its subsidiary, Suzlon Global Services (SGSL), after conversion of CCPs in 20 years. SGSL, a 100% subsidiary of Suzlon, is involved in designing and manufacturing equipment for generating wind energy.

The promoter has promised to bring in equity of Rs 275 crore and is in talks with other lenders for working capital loans. The promoter, Tulsi Tanti, is also supposed to sell off some of the company’s assets which include the headquarters in Pune, Maharashtra. SBI’s approval is the first step in the resolution process.

The resolution plan is being circulated among other lenders in the consortium for their approval as under the inter-creditor agreement (ICA), the plan must be approved by at least 66% of the lenders in the consortium. Suzlon Energy had entered into an ICA with lenders for restructuring on 1 July 2019. The company is expected to implement the proposed restructuring plan by 31 March 2020.

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June 2020
10 Jun 2020