Lenders led by State Bank of India are seeking to acquire loans made to Suzlon Energy Ltd. (SUEL)’s German unit, a move that would enable India’s largest wind-turbine maker to access cash at the business, said three people with knowledge of the matter.
The terms of a 750-million euro ($967 million) loan, made to Repower Systems SE this year, prohibit Suzlon from tapping the Hamburg-based unit’s cash or drawing on credit available to the business, two of the people said asking not to be identified as the information is private. The SBI-led group plans to change those terms after acquiring the loan, the people said.
Access to Repower’s cash would help the Pune-based company address debt that has reached 140 billion rupees ($2.6 billion) as of March 31, data compiled by Bloomberg show. Suzlon, which has lost money for three years, failed to repay $209 million of debt on Oct. 11 after bondholders rejected its request for a four-month extension. The default was the biggest on convertible bonds by an Indian company.
Repower’s cash balance was about $163 million, said Antoine Bourgault, a London-based analyst at ISM Capital LLP, citing data provided by Suzlon. The German unit also has $163 million of debt, “which may or may not have to be redeemed,” according to him.
Verena Puth, a spokeswoman at Repower, said the terms of the loan that prevent Suzlon from tapping the funds haven’t changed and declined to provide the unit’s standalone cash balance or total debt. Citing a quiet period, a spokesman at Suzlon declined to comment on the status of the loan. A spokesman at SBI did not reply to an e-mail seeking comment.
“We are looking at ways to resolve the issue and need time to sort this out,” SBI Deputy Managing Director Santosh Nayar said on Oct. 11.
The 750-million loan to Repower was made by a group led by BayernLB Holdings AG, Commerzbank AG and Deutsche Bank AG, the company said in March. Thirteen banks and credit insurance companies took part in the loan which comprised a 725 million euro letter of guarantee and a 25 million euro credit facility, according to a March 1 statement.