Wind energy equipment firm Suzlon Energy has raised $150 million through foreign currency convertible bonds (FCCB) as part of a bigger fund-raising programme that may net as much as $1.1 billion. The initial conversion price of the FCCBs, due in 2016, has been set at Rs 54.01 per share and the bonds bear a yield to maturity (YTM) of 6.5 per cent.
The FCCBs will have a maturity of five years and one day, and Suzlon has applied to list the bonds on the Singapore Stock Exchange. The issue of bonds is also subject to an upsize option of up to $50 million, which has not been exercised as on date.
Macquarie Capital (Singapore) Pte Ltd acted as the global co-ordinator, joint book runner and joint lead manager while The Royal Bank of Scotland acted as the joint book runner and joint lead manager to the transaction.
The company has not disclosed for what specific purpose it will use the funds raised through the FCCB. But on Monday, it was stated that the firm was looking to take its German subsidiary REpower private.
At present, Suzlon’s arm AE-Rotor Holding BV owns 95.16 per cent in REpower and under the German Stock Corporation Act, a shareholding of 95 per cent and above in a German firm enables the majority shareholder to initiate the ‘squeeze-out’ proceedings in respect of minority shareholders. Suzlon has initiated the squeeze-out that will result in REpower becoming a wholly owned subsidiary of the Indian company.
It was in fiscal year 2008 that Suzlon had acquired stake in REpower Systems AG, Germany, and thereafter increased its holding.
Suzlon scrip dropped 1.9 per cent to Rs 48.7 at mid-trading hours on Tuesday after it announced details of the FCCB issue. The FCCB issue was opened on Monday with a floor price for the conversion of the bonds, pegged at Rs 46.05 per share.
In October last year, Suzlon’s board had approved further issue of equity shares, GDRs, ADRs, FCCBs, SPNs and/or any other securities convertible into or linked to equity shares up to Rs 5,000 crore.
At the same time, IDFC Private Equity, an infrastructure-focused PE firm with $1.3 billion under management, swapped its stake in the components arm of wind turbine maker Suzlon Energy Ltd for an interest in the listed parent company. As a result, SE Forge Ltd, which makes large forging and casting products catering primarily to the wind power industry, became a wholly owned subsidiary of Suzlon Energy.
IDFC PE picked up 17.1 per cent stake in SE Forge for Rs 400 crore in September, 2008.
Suzlon underwent a refinancing of debt which came after its acquisition of companies like REpower and Hansen. It also sold 35 per cent of Hansen for around $370 million in November, 2009, to reduce its debts.