With the sale of Senvion to Centerbridge Partners for a cash consideration of 1 billion euros and a potential earn-out 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 R7,000 crore, around R5,000 crore would be used to reduce the firm’s debt while R2,000 crore would be used to fund operations.
However, even after the repayment, Suzlon will be left with a debt of R10,000 crore, Vagadia said, including around R2,000 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 R2,000 crore on account of the sale was provided for in the quarter ended December 31, 2014.
The completion of the sale to Centerbridge paves the way for an R1,800-crore investment by Dilip Shanghvi & Associates (DSA), promoters of Sun Pharmaceuticals, 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, was bought by Suzlon in a series of tranches totalling $1.4 billion that gave the Indian company full control in 2011. 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 R16,500 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 R2,000 crore in FY15 on revenues of close to R21,000 crore.
The agreement with Senvion gives Suzlon a licence for offshore technologies for India while Suzlon is to give Senvion the S111-2.1 MW licence for the US market.
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