Lenders to Suzlon sign ICA for stress resolution

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Published: July 18, 2019 5:19:35 AM

In April, CARE Ratings had downgraded Suzlon Energy’s long- and short-term bank facilities worth a total Rs 16,185.46 crore to ‘D’ from ‘BB’, with a negative outlook on the borrowings.

Wind power producer, Suzlon energy, ICA, stress resolution, industry news, On Tuesday, Suzlon had defaulted on principal payments due on foreign currency convertible bonds (FCCBs) worth 2 million. The company owes banks Rs 9,624 crore as on March 31, 2019.

Wind power producer Suzlon Energy on Wednesday said its secured lenders have signed an inter-creditor agreement (ICA) under the Reserve Bank of India’s (RBI) June 7, 2019, circular for resolution of stressed assets. The circular makes it mandatory for lenders, including financial institutions and small finance banks, to enter into an ICA within 30 days from a default, also referred to as the ‘review period’, during which lenders review an account and decide on a resolution strategy.

On Tuesday, Suzlon had defaulted on principal payments due on foreign currency convertible bonds (FCCBs) worth $172 million. The company owes banks Rs 9,624 crore as on March 31, 2019.

In a notification to the stock exchanges, Suzlon Energy said on Wednesday, “The company is working on holistic solution for its debt and continues to be in discussions with various stakeholders in relation to its outstanding debt, including the bonds. Actual impact can only be ascertained once any amicable solution is worked out with the lenders, including the bondholders.” Of $547 million worth of bonds, $172 million worth of payments were outstanding on Tuesday.

In April, CARE Ratings had downgraded Suzlon Energy’s long- and short-term bank facilities worth a total Rs 16,185.46 crore to ‘D’ from ‘BB’, with a negative outlook on the borrowings. “The ratings assigned to the bank facilities of Suzlon Energy (SEL) takes into account the ongoing delays/defaults in debt servicing on the loans rated by CARE resulting from stretched liquidity position,” the rating agency said in its rating rationale. It added: “This has been on account of impaired volumes resulting from wind industry’s transitionary phase and delay in monetisation of assets.”

The company had defaulted in term loan obligations and there were irregularities in fund-based and non-fund based limits, according to CARE. Promoted by Tulsi Tanti, Suzlon Energy is a fully-integrated wind power solution provider and its activities include wind resource mapping, land and infrastructure development, creation of power evacuation facilities, component manufacturing, wind turbine installation, commissioning and operation & maintenance services (OMS) both in domestic and international markets.

Suzlon Energy, through its wholly-owned subsidiary SE Forge undertakes the manufacturing and machining of large forging and casting products. Suzlon Energy has formed a number of subsidiaries in India and overseas for component manufacturing, wind turbine generator (WTG) marketing and for providing engineering procurement & construction (EPC) and OMS.

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