The SBI-led consortium of lenders to wind turbine manufacturer Suzlon Energy is asking for more promoter contribution towards its debt-restructuring package, said a banker close to the development. Suzlon presented a restructuring proposal at the SBI premises late last week, the banker added.
The company in a release said it has initiated discussions with senior secured lenders and plans to restructure debt with a maturity period of ten years under the corporate debt restructuring (CDR) mechanism, including a two-year moratorium on principal and interest payments on term-debt. The CDR cell is an informal forum of lenders that assist debt-laden companies to tide through their financial woes. Suzlon has also suspended FY2012-13 guidance of revenues amounting to R27,000-28,000 crore and earnings before interest and tax (EBIT) margin of 6%.
Kirti Vagadia, chief financial officer of Suzlon said: ?The company has decided to undertake a debt restructuring exercise under CDR mechanism. Our senior secured lenders are supportive of our long-term business plans, and our efforts to consolidate our overall debt to achieve a sustainable capital structure.”
The debt restructuring proposal comes in light of Suzlon’s foreign currency convertible bonds (FCCB) holders rejecting its request to extend the time for the redemption of FCCBs of $221 million due to mature in October.
As of June 2012, the company reported debt to the tune of around R13,000 crore, of which FCCBs contributed around R3,500 crore. Therefore Indian banks are looking to restructure debts amounting to around R9,000-10,000 crore that is due to them.
Suzlon has been under pressure due to a slowdown in global turbine sales and growing debt. In 2011-12, the company posted revenues worth R21,082 crore with a net loss of R479 crore.
“Considering our overall business outlook, we recognize that despite strong business fundamentals and a $7.2 billion orderbook, liquidity constraints over the first half of the fiscal, a volatile market environment, and the timeline of CDR process will continue to impact performance,? said Vagadia.
The banker said the promoters of the company should look to shed its non-core assets as part of CDR package. Also the lenders have requested for a list of the private assets of chairman Tulsi Tanti in time for the second meeting of the lenders which could be held later this week.
Suzlon Energy Limited’s is suspending its guidance for FY13. The guidance given by the company for FY 13 had pegged revenues between Rs 27,000 to Rs 28,000 crore with and EBIT margin of 6%.
Suzlon’s revenue in FY 12 was at R21,082 croe with EBIT margin of 5.5%. The company had said it had a robust order book and an order coverage of 80-90% of FY13 guidance.
