Suzlon is finally inching closer towards the REpower Systems deal closure. It is expected to seal the deal within next few days after it completes the final tranche of payments for this acquisition. The Tanti family, promoters and majority shareholders of Suzlon Energy, sold 4% in the company to raise funds for its final payment. With the family arranging for all the funds to put a final seal on the REpower deal, it makes Suzlon the proper owner of the REpower shares.
Speaking on behalf of the Tanti family, Tulsi Tanti said, ?The funds raised through the sale of this stake are going to be used primarily to advance inter corporate deposits through promoter group entities to the company to part finance the buyout of the stakeheld in REpower Systems AG by Martifer SGPS. This stake sale will ensure that the overall timeline in implementation of REpower integration is not delayed.The Promoter Group has always acted in furtherance of the interest of the company and its stakeholders, and stays committed to the long-term future of the Group.The Promoter Group does not envisage any need for further stake sale in the foreseeable future.? DKR Oasis and Prudential Asia facilitate this stake sale, Tanti said. The statement did not disclose the price at which the stake was sold.
The Tanti family sold 6 crore shares on Monday which is about 4% of the paid up share capital of the company. Suzlon had a May 31, 2009, payment deadline to meet. The funds raised will be used for paying the last tranche of euro 175 million to Portugal-based Martifer Group. Suzlon had opened on the BSE at Rs 95 and reached a low of Rs 87 before closing on Rs 89.05. This could put the deal size at around Rs 560 crore. The family has sold 6% in the market in the last one month.
Suzlon has informed BSE on May 25 that its promoter Rambhaben Ukabhai sold 2.75 crore shares, representing 1.84% stake in the firm, Girish R Tanti sold 2.35 crore shares, which is 1.57% stake and Nidhi Tanti sold 90 lakh shares representing 0.60% stake in the company on Monday. Post-sale, the Tanti family and promoters now hold 60% in Suzlon Energy.
As per Suzlon?s agreement with the Martifer? Group, it had to pay Martifer euro 270 million by May 2009 for acquiring Martifer?s 22.4% stake in REpower Systems AG. Suzlon has already paid up euro 65 million in December 2008 and euro 30 million in April 2009.
While Suzlon has 91% voting rights in REpower, this fresh payment will give them 91% control and proper ownership of the shares. The next step, as per German laws, would be to sign a domination agreement with the REpower board of management. This is because ownership and management control are treated as two separate matters and the a formal domination agreement has to be signed for total control. The company has not indicated when or at what point it will go forward and do this.
The only hurdle will be the bankers who are funding REpower. Their clearance would be required for this and they will allow this only after REpower?s debts with them are cleared. With Suzlon?s balance sheet completely leveraged, the company would not want to disturb the REpowers funding, growth and expansion plans.