Dilip Shanghvi, the founder of India’s largest domestic pharmaceutical company, Sun Pharmaceutical Industries, has agreed to acquire a 23 per cent stake in debt-ridden wind turbine maker Suzlon Energy for Rs. 1,800 crore.
A statement from Suzlon said that as per the definitive agreements, Dilip Shanghvi Family and Associates (DSA) will hold 23 per cent stake in Suzlon Energy post the transaction while Suzlon promoter, Tulsi Tanti’s family will hold 24 per cent and retain management control by virtue of pooling arrangement for voting. The consideration is for 100 crore new shares in Suzlon Energy to be issued by a preferential allotment.
“While we believe Suzlon has the potential to emerge as a global leader in the renewable energy space from India, it will take substantial and sustained effort on part of the management team to achieve a significant operating performance improvement,” Dilip Shanghvi, said in a statement. “We have strong faith in the leadership of Tulsibhai to achieve this and will continue as financial investors.”
Suzlon reported a consolidated loss of Rs. 6,533 crore for the quarter ended December 2015. As part of its strategy to hive off non-core businesses to pare its huge debt of Rs. 17,000 crore, in January, it sold its overseas subsidiary Senvion for Rs. 7,200 crore.
“All the strategic initiatives are extremely crucial and will pave the way for our growth,” Tulsi Tanti, Chairman, Suzlon Group said. “These bold steps will strengthen our capital structure permanently, enabling significant deleveraging and liquidity to ramp up volumes rapidly,” he added.
Further, DSA and Suzlon will also form an equal joint venture (JV) for wind farm development business. The JV will develop 450 MW wind farms and DSA will assist in providing incremental project specific non-fund based working capital facility to Suzlon.
“These initiatives will result in sizeable debt reduction, savings on interest expense and will provide the necessary liquidity to boost operations,” Amit Agarwal, CFO, Suzlon Energy, said in a statement.
Post the transaction, the company said it would enter FY16 with a strong liquidity position to top the opportunity available in India as well as key growth markets like USA, China, Brazil, South Africa, Turkey and Mexico.
Open offer to follow
“We believe that our financial investment through equity infusion and facilitating working capital will enable the company to tap large opportunities in the renewable energy sector,’’ Sudhir Valia, part of DSA said adding that an open offer would be made as per regulatory requirement.
Accordingly, DSA and Associates will make an open offer of up to 1,57,64,38,113 equity shares of Rs. 2 each representing 26 per cent of the emerging capital of Suzlon Energy. In a filing to the BSE, the company said the triggered offer will be made at an offer price of Rs. 18 per share and aggregate around Rs. 2,837.6 crore. “The offer price is subject to finalization of the price for the proposed preferential issue of shares as on February 16, 2015.”
