Lenders to extend inter-creditor agreement for Suzlon resolution

February 19, 2020 2:30 AM

Suzlon Energy on February 12 reported widening of consolidated net loss to Rs 743 crore in the December quarter compared to net loss of Rs 40 crore in the same period a year-ago

The 20% additional provisioning by banks can be reversed if the case is admitted by NCLT bench.The 20% additional provisioning by banks can be reversed if the case is admitted by NCLT bench.

By Ankur Mishra

Lenders to Suzlon are looking to extend the inter-creditor agreement (ICA) till April 30, 2020, to give themselves more time to come up with a resolution, bankers close to development told FE. The consortium of lenders entered into an ICA on July 7, 2019, and the standstill period of 210 days expired on January 7, 2020.

The extension of ICA is seen as a last mile effort by the lenders to come up with a solution for the troubled wind turbine maker. As per the June 7 circular of Reserve Bank of India (RBI), banks will need to make additional 20% provisioning in the March quarter since the resolution could not be completed in 210 days period.

The circular also mandates 15% additional provisioning if a resolution is not found in 365 days from the date of signing ICA. A lender privy to the matter said if no consensus is arrived at even after extension of ICA, there would be no choice but to refer it to National Company Law Tribunal (NCLT) for resolution. The 20% additional provisioning by banks can be reversed if the case is admitted by NCLT bench.

FE reported earlier that there is a lack of consensus among lenders on a proposal of restructuring given by promoters, in which banks need to take a 60% haircut and infuse Rs 1,800 crore working capital for the company to remain a going concern. Suzlon owes financial creditors Rs 12,785 crore and State Bank of India (SBI) is the lead lender. The ratio of sustainable and unsustainable debt is 36:74. The promoters have suggested that banks effectively defer the repayment of the unsustainable portion of the debt loans till 2030. The sustainable portion of debt will be repaid between now and 2020, according to the proposal by the promoters.

Suzlon Energy on February 12 reported widening of consolidated net loss to Rs 743 crore in the December quarter compared to net loss of Rs 40 crore in the same period a year-ago. The company also disclosed to exchanges that its ‘going concern’ depends on the favorable outcome of the restructuring plan. As per exchange filing on January 7, Suzlon Energy had earlier defaulted on the payment of Rs 7,256 crore to lenders. FE learned that the lenders had earlier discussed resolution with two investors, reportedly Canada-based Brookfield and Denmark-based Vestas Wind Systems. Subsequently, the lenders considered the proposal by the existing promoters led by Tulsi Tanti.

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