Company needs to repay close to $700 m worth of debt this year
Suzlon Energy said on Monday that bondholders had allowed the company to reschedule repayments of foreign currency convertible bonds (FCCBs) worth $360 million due for redemption on June 12. Suzlon Group CFO Kirti Vagadia said bondholders, who met with the company?s management in London, had agreed to the company?s request for up to a 45 day extension adding that the bonds could now be repaid by July 27. The sum repayable comprises a principal amount of $247 million and the bonds carry a coupon rate of 7.5%. Ninety-seven per cent of bondholders were in favour of giving the company additional time to repay the bonds.
The Pune-headquartered Suzlon needs to repay close to $700 million worth of debt this year. The Tulsi Tanti-promoted manufacturer of wind turbines had raised the FCCBs in 2008 with the conversion price fixed at R97.26 a share. On Monday, the stock closed at R18.20 on the Bombay Stock Exchange. Another tranche worth $209 million is due in October, making for a total repayment amount of $ 569 million.
On May 18, the company had said it was in advanced talks to raise $300 million to refinance the FCCBs. At the time Suzlon had sought 45 days? extension from bondholders, who allowed it the grace period. The Reserve Bank of India had also agreed to the 45-day extension. Vagadia said the company was hoping to borrow money through high-yield bonds, equity or by selling non-critical assets. Other avenues being explored for funding the FCCB repayment include monetising international assets and a release of working capital ? $200 million of receivables from Edison Mission ? though analysts point out that this may not be in Suzlon?s control.
Suzlon?s net debt for the wind business stood at Rs12,100 crore as of March 31. This was despite the cash inflows from the sale of a stake in Belgium’s Hansen to Germany’s ZF Friedrichshafen completed last year.
Analysts have been concerned about Suzlon being able to meet its commitments. In the three months to March 2012, Suzlon reported consolidated revenues of Rs 6,800 crore, down 6% year-on-year on the back of weak sales for the core wind business. There was also a delay in the execution of some projects. The company?s Ebitda margin was also weak at 5.9%, down from 12.8% in the March 2011 quarter. Further, the company?s high interest costs pressured the bottom line as a result of which it reported a consolidated net loss of Rs 300 crore compared with a profit of Rs 450 crore in the March 2011 quarter. According to Kotak Institutional Equities, the balance sheet continues to remain stretched with higher debt and working capital levels. Suzlon reported a Rs 1,900-crore increase in the net debt for the wind business and a Rs 1,100-crore rise in consolidated working capital levels.