According to reports, Suzlon Energy’s shares went up by as much as 6.5 per cent in today’s trade and closed at Rs 11.70, after the company is believed to have reached a settlement with its bondholders over its 2012 default.
“We will reach a settlement with the foreign currency convertible bond (FCCB) debtors in the next two to three days,” said a Suzlon company official, refusing to be named. The company had defaulted on $200 million FCCB bond payment in late 2012. The wind-turbine maker later went in for corporate debt restructuring (CDR) where its debt worth Rs 9,000 crore was restructured.
Suzlon refused to comment on market speculation, in response to a query on the development. The contours of the settlement, like the penalty and interest to be paid to the bondholders, are not known. The total payment to FCCB debtors, including that of future payments could come up to $500 million, and a settlement for the entire amount might be done, at one go.
“This proposed agreement with FCCB holders indicates that the deep financial recast package done under corporate debt recast done two years ago, is working. The turnaround is happening but much business expansion depends on the economic conditions in target markets –Europe and North America,” said a senior State Bank of India executive. SBI is the lead banker of Suzlon.
Suzlon has been facing many headwinds like slowdown in the power equipment market, both globally and in India where domestic construction activity has come to a stand-still in the last two years. Added to this, Suzlon had acquired German equipment company REpower. In spite of acquiring the entire company, tough German laws had restricted the company from transferring the free cash in the company, leading to more troubles.