According to reports, Suzlon Energy Ltd., India’s biggest and the world’s fifth largest wind turbine company, has initiated talks with its lenders to restructure its debt.
The major issues that the company is facing are the liquidity to service its orders and the debt suffered due to the acquisition of REpower.
However, Suzlon has initiated corporate debt restructuring (CDR) mechanism, a system by way which a company tries to reorganize its outstanding obligations. More than 1200 companies have availed of the CDR scheme and around 80 percent have come back with better capital structures and higher profits.
If the lenders and the company can sort this out in a way that business is protected and the imminent REpower merger can be brought about smoothly and swiftly, this restructuring could actually be the best thing to happen to Suzlon and its share holders in the long run.
The company seems to be riding high on customer confidence as it witnessed a huge order book of over 7.2 billion dollars.
Suzlon could make a turnaround. According to analysts, Suzlon share price may not see further damage for now.
However, the next few months and Suzlon’s steps towards consolidation and course correction will be critical in making this situation work in their favor.