Wind energy major Suzlon on Thursday said its lenders, comprising 19 banks led by the SBI, have approved its proposal to rejig Rs 9,500 crore of domestic debt, providing a big relief to financially troubled company.
"The empowered group of corporate debt restructuring (CDR) cell comprising 19 lenders today formally approved our CDR proposal to recast Rs 9,500 crore of domestic debt. The package is effective from October 1, 2012 and does not include our foreign currency debt," Suzlon said in a statement.
The Tulsi Tanti-promoted company further said, the CDR proposal involves a 10-year door-to-door back-ended repayment plan with a reduced interest rate, which effectively means a 3 per cent savings on interest burden for the company.
The proposal also involves a two-year moratorium on principal and term-debt interest payments, apart from a fresh working capital loan of Rs 1,800 crore, which will have a six-months interest moratorium, which is aimed at helping the company accelerate execution of its strong order book.
During the course of the two-year moratorium, interest worth Rs 1,500 crore will be converted into equity, the company said.
The Pune-headquartered company further said that the package also includes promoters bringing in Rs 250 crore of fresh equity, of which Rs 62 crore was infused last December.
"This approval clearly underscores the fundamental viability of our business," Kirti Vagadia, Chief Financial Officer Suzlon Group.
SBI is the consortium leader and the CDR plan has been drafted by SBI Caps. SBI has a Rs 3,500-crore exposure to the company.
Suzlon was looking at recasting Rs 11,000 crore of its Rs 14,568 crore domestic loans (as of the September quarter).
This debt is four times its equity. It sought the debt restructuring process during late October.
The other main lenders include IDBI Bank, Bank of Baroda, Axis Bank, Punjab National Bank, Indian Overseas Bank, Central Bank of India, Yes Bank, and State Bank of Bikaner & Jaipur, among others. Most of these loans, which are fully-secured, were availed of in the past two-and-a-half years and are being serviced at about 14 per cent interest. Post-CDR, the effective interest will be around 11 per cent.
The market appeared to have ignored the development and Suzlon scrips tanked nearly 3 per cent to Rs 18.05 on the BSE, whose main gauge slipped by 0.51 per cent or 103 points.
Suzlon stocks traded at as much as 95 percent below its all-time high of Rs 459.85, peaking in early 2008, when the global