With the sale of Senvion SE to Centerbridge Partners for a cash consideration of 1 billion euros and a potential earnout of up to 50 million euros complete, the Suzlon Group is looking to pare its debt. Kirti Vagadia, Group Head, Finance, Suzlon Group, said on Thursday, that of the proceeds of roughly Rs 7,000 crore, around Rs 5,000 crore would be used to reduce the firm’s debt while Rs 2,000 crore would be used to fund operations.

However, even after the repayment, Suzlon will be left with a debt of Rs 10,000 crore, Vagadia said, including around Rs 2,000 crore of Foreign Currency Convertible Bonds (FCCBs). Of the outstanding FCCBs, $247 million worth of bonds have so far been converted into equity and the remaining $ 328 million is due only in 2019.The loss of Rs 2,000 crore on account of the sale has been provided for in the quarter ended December 31, 2014.

The completion of the sale to Centerbridge paves the way for an investment of Rs 1,800 crore by Dilip Shanghvi & Associates(DSA), promoters of Sun Pharma, in lieu of a 23% stake in Suzlon; DSA will also infuse funds to be used for executing projects. Senvion, previously known as REpower Systems SE, was bought by Suzlon in a series of tranches totaling $1.4 billion that gave the Indian company full control in 2011.Loss-making Suzlon has been under pressure over the last few years due to a slowdown in global turbine sales and a debt pile that had grown to around Rs 16,500 crore. It was forced to restructure $1.8 billion of debt after defaulting on a $200-million convertible bond redemption in 2012. Suzlon is expected to post a loss of about Rs 2,000 crore in FY15 on revenues of close to Rs 21,000 crore.

The agreement with Senvion gives Suzlon a licence for off-shore technologies for the Indian market while Suzlon is to give Senvion the S111-2.1 MW license for the USA market. Following Senvion’s sale, Suzlon will focus on the home market and emerging markets like China, Brazil, South Africa, Turkey, Mexico as well as the US.

Brokerage house Nomura had said in its report that Suzlon had taken corrective steps to substantially repair its balance sheet by selling off its German offshore wind arm, Senvion, for 1 billion euros and issuing fresh equity worth Rs 1,800 crore to Dilip Shanghvi & Associates. According to Nomura, Suzlon can now focus all its energies on new order wins and execution in the domestic market, and is well placed to win back 50% market share. Nomura termed Suzlon as a potential turnaround story and expects the company to break even by 2016-17.

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