Suzlon Debt Revamp to Delay Bondholder Payment, Elara Says

Suzlon Energy Ltd. (SUEL) bondholders will get paid after Indian lenders, which agreed to revamp about $2 billion of the wind-turbine makers debt this week, Elara Capital Plc said.

“It is unlikely that Suzlon will be able to pay any cash upfront to the bondholders” of its 2012 convertible notes because lenders led by the State Bank of India reduced the value of Suzlon’s liabilities by $182 million, Rosita D’Souza, a Singapore-based credit analyst for Elara, said in a note to clients today.

Suzlon, which defaulted on those bonds last month, is expecting to get a combined $260 million from the sale of its Chinese manufacturing business and a payment from customer Edison International. (EIX) That money will go to Suzlon’s secured lenders in India first, D’Souza said.

The Pune-based manufacturer also wasn’t able to pay the first coupon on its 2016 note last month. Failure to pay any debt allows holders of Suzlon’s 2014 and 2016 notes to seek immediate payment on an additional $311 million in liabilities, offer documents show.

“It’s highly likely that the cross-default clause may be triggered,” D’Souza wrote in the note.

Suzlon will probably try to restructure all its outstanding convertible bonds at one go, she said. A partial rollover into a new unsecured five-year note for those holding the 2012 bonds, reducing the strike price and introducing a coupon for the 2014 notes are options that may be considered, D’Souza wrote.

Suzlon has gained 27 percent since Nov. 26 when its secured lenders voted to allow it to restructure about 80 percent of its 140 billion rupees ($2.56 billion) of debt. The shares rose 5.9 percent to 19.65 rupees, the highest in almost five months, as of 1:38 p.m. in Mumbai trading today.

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

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