Wind turbine maker Suzlon Energy is said to be close to striking a deal with its foreign currency convertible bonds (FCCB) holders.
The company had defaulted on $200 million in October 2012. According to sources close to the development, Suzlon had come to an in-principle understanding with the bondholders and a deal could be announced in the next 10 to 15 days.
The wind turbine maker’s FCCBs were not part of the corporate debt restructuring that the company went through with its domestic lenders.
A television channel reported a settlement with bondholders through a fresh issue of five year bonds to the tune of $500 million but Suzlon refused to comment on these development and said these were speculative figures.
The negotiations between the company and the bondholders had been going on for more than a year. The company had paid the first tranche of FCCBs of $4,360 million in July 2012 after a 45-day extension. The company had then sought extension of four months for the October 2012 series but this was not approved by the majority of bondholders and it resulted in a default by the company.
Since then the company has been in active dialogue with over 80% the bondholders.
Some of the bondholders representing a significant majority across all series had formed an ad-hoc committee and engaged legal and financial advisors to fast-track the process. Kirti Vagadia, Suzlon group head (finance), had been maintaining that they were talking to bondholders so that there was a resolution with bondholders that was beneficial to all stakeholders.
After the second-quarter results of FY14, Vagadia had said that they had “progressed a lot and were keeping their fingers crossed”. So the threat of legal action against the company for the defaults was not pursued by the bondholders.
The current deal reportedly includes not only the defaulting October series but also the July 2104 and April 2016 series. The This includes all the FCCBs — the October 2012 old series with outstanding of $121.14 million and $20.8 million along with the July 14 new issuance series worth $90 million and April 2016 new issuance worth $175 million totaling $396.23 million.
Suzlon reported a loss of R782 crore for the second quarter of FY14. Suzlon’s Q2 FY14 total income was down by 16.49% to R4,808 crore. Suzlon’s net debt at the end of October 2013 was R14,156 crore. Suzlon had set a target of raising $400 million from sale of assets but it was taking more time that expected due to difficult business environment. The Suzlon stock was up 6.47% on the BSE to R11.69 on Tuesday.