Suzlon raises $647M via bond issue to support CDR

World’s fifth largest wind turbine maker Suzlon Group has raised $647 million through its wholly owned subsidiary, AE Rotor Holding (AERH), by issuing bonds as part of the corporate debt restructuring (CDR) plan of the company, according to a stock market disclosure.

The bonds are US dollar-denominated; backed by Stand-By Letter of Credit (SBLC) from the State Bank of India and have a five-year bullet maturity. The bonds will be listed on the Singapore stock exchange.

The funds raised through this issue will be used to refinance the existing US dollar-denominated foreign currency debt of Suzlon and its subsidiary.

“In addition to the significant progress made on the final documentation for CDR package, this marks an important milestone for the group and completes one of the key requirements of our CDR proposal, addressing our major bank debts,” said Kirti Vagadia, finance head of Suzlon Group.

“The unique structure of the deal, which we believe to be the first ever USD credit-enhanced bond from India, gives the group a much needed headroom via low-cost funding and a back-ended repayment schedule. We also continue to be in active dialogue with FCCB holders and banks to arrive at a consensual solution in the interest of all stakeholders, which is the last remaining step in our comprehensive liability management exercise,” he added.

JPMorgan acted as the sole book runner and joint lead manager while SBICAP (UK) Ltd acted as the joint lead manager on this issue.

Suzlon ran into a debt pile-up, partly related to its big-ticket overseas acquisitions. Earlier this year, it got a formal approval for its proposal to restructure domestic debt from the corporate debt restructuring (CDR) cell.

A consortium of 19 banks approved the CDR package of Rs 9,500 crore ($1.8 billion) including a two-year moratorium on principal and term-debt interest payments, 3 per cent reduction in interest rate and a six-month moratorium on working capital interest. As part of the package, Rs 1,500 crore (two years’ interest payment during moratorium) will be converted into equity or equity-linked instrument over the next two years, to bring stronger financial stability and there will be a 10-year door-to-door back-ended repayment plan.

Last month, the promoters of the firm sold around 6.19 per cent stake to raise Rs 240 crore ($45 million). This was part of the CDR plan of the company.

PE-backed Suzlon’s scrip declined 1.11 per cent to close at Rs 13.65 on the BSE in a strong Mumbai market on Thursday.

Suzlon, the world’s fifth largest wind turbine maker, designs, develops and sells wind turbine generators of different capacities and their components. It is backed by Citi Venture Capital International (CVCI), which had invested in the firm way back in 2004, along with ChrysCapital. Although ChrysCapital exited the company long ago, CVCI remains invested in the firm. Suzlon also counts IDFC Alternatives as an investor.

This bond issue comes along with a string of large-sized bonds issued by several Indian firms. Earlier this week, Temasek-backed Bharti Airtel, India’s largest mobile operator by subscribers, also announced that it raised an additional $500 million through a bond issue, within weeks of raising $1 billion through the same route.

(Edited by Sanghamitra Mandal)

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