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Morgan Stanley buys into Suzlon shares as promoters sell to fulfill CDR norms

According to reports, the promoter group of world’s fifth largest and India’s largest wind turbine maker Suzlon Energy have sold around 2.11% of their stake.

Morgan Stanley Mauritius bought 3.26 Cr shares of Suzlon at Rs 16.75 per share on the NSE amounting to Rs 54.61 Cr.

Earlier this year Morgan Stanley also concluded a major deal worth Rs 1200 Cr investing in Singapore based Continuum Wind Energy that develops wind farm assets in India.

The stake cut, required to fulfill the CDR norms, saw the promoter group selling 3.75 Cr shares raising about Rs 63 Cr and scaling down their holding to 50.65%.

Debt of the company stands at over Rs 13,000 Cr and lenders had supposedly demanded the company’s promoters to bring in Rs 250 Cr in order to restructure the loans.

According to the latest CDR norms, the restructuring cell demands a 25% capital infusion and if it is accepted in case of Suzlon, the company will have to pump in Rs 2,750 Cr as fresh equity.

State Bank of India has the maximum exposure of around Rs 3,500 Cr in the company.

Now, of the total $566 Mn loans that were created in 2007 and 2009, $360 Mn was repayed earlier in June this year by selling wind farm assets in India for $40 Mn divesting  its Chinese subsidiary for $ 60 Mn.

Earlier this year and after a 45-day extension period graced by the bondholders, Suzlon had redeemed earlier due FCCBs of $360 Mn but later could not gain another extension demanded to repay overseas debt worth about $221 Mn.

Also, the bond yield on Suzlon’s 2016 debt rose 35.7 basis points to 35.4% recently, its highest since Sept. 27, indicating highest risk perception. It has surged 9.3% this year, compared with 4.9% for similar-maturity debt in Denmark’s Vestas Wind Systems A/S. (VWS).

Much of the debt of the company was raised to fund a much coveted buyout of German WTG maker RePower. It has a capacity of 1,250 MW with a planned expansion of an additional 450 MW. REpower manufactures medium to high capacity WTG (1.5 to 5 MW) and has employee strength of 1,150.

Divestment of its non-core assets are also inevitable as has been reported since quite some time now without any clarity on which assets would be divested. Suzlon has windfarms with capacity of more than 6700 MW spread across 8 states including Rajasthan, Gujarat, MP, Maharashtra, Karnataka, AP, Tamil Nadu and Kerala. Apart from it’s domestic operations, it has wind farms in Germany and Belgium.

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