Even the tenacity of a Tulsi Tanti wasn’t enough to let Suzlon Energy hold on to its most prized asset. Weighed down by debt, Suzlon said on Thursday it would sell its German subsidiary Senvion for 1 billion euros or R7,200 crore to US private equity firm Centerbridge Partners, reports fe Bureau in Mumbai. The German company — then known as REpower — had been acquired in June 2007 at an estimated 1.5 billion euros after Suzlon outbid French energy major Areva. With borrowings of R17,323 crore and a default of $210 million in October 2012, the wind turbine manufacturer has been in trouble with its lenders who agreed to a restructuring of the firm’s debt in early 2013. But bankers have continued to pressure the firm to sell assets to make good at least a part of the dues.
The all-cash deal will also bring in future earnings of about 50 million euros or Rs 360 crore, subject to the fulfilment of certain operational milestones. The Hamburg-based company posted FY14 revenue of 1,806 million euros, which implied a contribution of approximately 70% to Suzlon’s fiscal 2014 revenue, assuming an average exchange rate of Rs 81.
With the company having sold its most valuable asset, shares of Suzlon fell as much as 8% in intra-day trade on Thursday on the BSE, and the stock closed down 7.5% at Rs 15.91.
The company will now focus on domestic and US operations and will look for opportunities in emerging markets such as China, Brazil, South Africa and Mexico.
Chairman and managing director Tanti said in a conference call that the sale will not affect the company’s profitability in the current fiscal.
“The company seems to have aggressive growth plans in the Indian market,” said a consultant at a global consultancy firm. “The deal will reduce its debt and its debt servicing obligations will also reduce, which implies greater profitability in future.”