Suzlon Gains as China Unit Sale, Loan Plan Ease Debt Concerns

Suzlon Energy Ltd. (SUEL), India’s largest wind-turbine maker, jumped in Mumbai trading after saying a bank loan and the sale of a Chinese factory will help it raise $360 million to repay bondholders and lenders.

Suzlon rose as much as 4.3 percent on optimism a $300 million term loan from a group of banks including SBI Capital Markets Ltd. will be agreed as early as this week. The dollar- denominated loan will have a “single-digit” interest rate, Chief Financial Officer Kirti Vagadia said today in an interview in Mumbai.

“We’re very close,” Vagadia said. He dismissed the possibility that Suzlon wouldn’t secure the funds in time before $358 million of convertible bonds mature on July 27. “I don’t foresee that risk.”

The Indian company has been seeking to raise cash as about $600 million in loan and bond repayments fall due in the financial year ending March 31. In October, Suzlon has another $200 million of convertible notes due and must also repay banks about $40 million this year, Vagadia said.

Suzlon added 2 percent to 17.75 rupees as of 3:42 p.m. in Mumbai trading. The shares were little changed this year.

Meeting those obligations could still be “tricky,” said Charanjit Singh, a Bangalore-based analyst for HSBC Bank Plc. Suzlon is “not out of the woods yet” and faces a higher default risk next year when it’ll face about $250 million in loan repayments, he said.

Asset Sales

Singh calculates Suzlon may need to raise at least $240 million through asset sales this financial year and next. So far, it has raised $40 million from selling two wind farms in April.

It expects another $60 million in the next “couple months” after obtaining government approvals to sell its Chinese manufacturing plant to China Power (Tianjin) New Energy Development Co., Vagadia said.

The $60 million from the China plant is “not critical” to meeting its bond obligations next month as the company will have the new term loan before then, Vagadia said. The facility, which produced turbine components including nacelles and rotor blades, has 600 megawatts of annual production capacity.

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net