Suzlon defaults on Rs1,169-cr foreign currency bonds

Wind turbine maker Suzlon has defaulted on payment of the principal amount of Rs1,169 crore ($172 million) to holders of its foreign currency convertible bonds (FCCBs), which was due on16 July.

In a filing with the exchanges, Suzlon said it has not made the payment of the principal amount, which was part of total bond issuance of $546.91 million, adding that the company is in negotiations with lenders to restructure entire outstanding debt.
“The company is working on a holistic solution for its debt and continues to be in discussions with various stakeholders in relation to its outstanding debt (including the bonds),” Suzlon said in its stock exchange filing.
Cash-strapped Suzlon is also understood to be in talks with Canadian investor Brookfield to sell a majority stake in the renewable energy company. However, the investment by the Canadian fund may take time and may happen only after the company manages to restructure loans and makes payment to FCCB holders.
If the talks with lenders fail, there is a possibility that Suzlon may go under the Insolvency and Bankruptcy Code (IBC) process.
Suzlon had total debts of over 11,100 crore, including net term loans of Rs7,761 crore and working capital loans of Rs3,380 crore. For the financial year 2019, Suzlon reported a net loss of Rs1,537 crore and revenues of Rs4,978 crore.
Suzlon had earlier said that it intends to reduce debt by 30-40 per cent, through strategic initiatives.
Towards this, it has gradually reduced working capital requirements over the last five quarters, which come down from Rs2,780 crore in the fourth quarter of 2018 fiscal to Rs1,552 crore in the fourth quarter of 2019 fiscal.
Suzlon Energy had, in 2012 also, defaulted on FCCB repayment. After its bondholders rejected an extension plea, Sun Pharma founder and MD Dilip Sanghvi played white knight in 2015, when he bought 23 per cent stake for Rs1,800 crore.