In a sign of stress widening across India’s credit market, Suzlon Energy has defaulted on redemption of its foreign currency convertible bonds (FCCBs) worth $172 million, or ₹1,200 crore, due on Tuesday.
Suzlon has asked bondholders to hold on till the company completes its one-time settlement with banks, said a source in the know of the development. However, its settlement with the banks depends upon its plans to sell stake to Canadian investor Brookfield, a move that may see promoters, with 19.8% stake, ceding management control.
“The company has not made the payment of the principal amount of the outstanding bonds, being $ 172,000,000, which was due on July 16, 2019 in accordance with the terms and conditions of the bonds,” said the company in a statement, adding that it was working on a holistic solution for its debt and that it continued to be in discussions with various stakeholders in relation to outstanding debt (including the bonds).
Brookfield is eyeing a majority stake in the company and discussions are on for a one-time settlement plan with creditors to restructure outstanding bank loans.
The firm has an outstanding debt of ₹7,761 crore, including FCCBs and working capital debt of ₹3,380 crore.
The firm’s bank facility ratings were cut to default by Care Ratings in April after the loss-making company defaulted on repayments worth ₹412 crore on term loans and working capital facilities in March. Suzlon had become India’s largest FCCB defaulter when it missed its payments in 2012.
In January 2015, Suzlon was forced to sell its prime asset, Senvion SE (formerly REpower) to U.S.-based private equity firm Centerbridge Partners for €1 billion (then, over ₹7,200 crore).
Sun Pharmaceuticals promoter Dilip Shanghvi is the largest shareholder in Suzlon, who acted as a white knight to help the company in 2015, buying a 23% stake for ₹1,800 crore when it was in deep financial trouble.
