Suzlon Reports Record Loss as Debt Burden Stalls Business
Suzlon Energy Ltd. (SUEL), the wind-turbine maker behind India’s biggest convertible-bond default, reported a record quarterly loss as the business stalled under mounting debts.
The group’s net loss widened sixfold to 19.1 billion rupees ($338 million) in the fiscal fourth quarter ended March 31, the company said in an e-mailed statement today. It posted its fourth straight yearly loss of 47 billion rupees.
Operations at the world’s fifth-largest maker of wind turbines had come to a “complete standstill” as a cash shortfall held up orders and management negotiated with creditors, Group Chief Financial Officer Kirti Vagadia said in a phone interview today. “Now things are flowing again, and the business is getting our full attention.”
The company wants to raise $400 million this financial year by selling about 15 assets, Vagadia said. That includes units Suzlon Energy (Tianjin) Ltd. and SE Forge Ltd., a U.S. facility, as well as other component-manufacturing and assembly plants.
“We should get traction on asset sales every quarter,” Vagadia said. “The whole process should take 12 to 18 months.”
Suzlon is struggling to pay down debt racked up in overseas acquisitions, which included its German unit REpower Systems SE, before a global supply glut slashed turbine prices by 25 percent from their peak in 2009. The Pune-based company ceded its position as India’s top wind-turbine supplier in its home market for the first time in at least a decade last year as it sought to contain its liabilities.
Vagadia said the company will regain the top spot as it focuses again on executing orders following a 95 billion-rupee debt reorganization plan concluded last month with lenders. “I don’t have a 1 percent doubt,” he said.
That plan gives Suzlon about four years of breathing space before repayments ramp up, according to an investor presentation sent by e-mail today. Under the terms, there is a two-year moratorium on the entire 95 billion rupees. Ten billion rupees will be due over three years, and increasingly bigger payments will be made starting in April, 2017. Total group debt was 152 billion rupees as of March 31, up 8 percent from last year, according to the presentation.
Suzlon failed to repay $209 million in October in India’s biggest convertible-bond default. That triggered a cross default on another $121 million of convertible notes maturing in July 2014 and $190 million in April 2016.
Bondholders have not yet exercised their right to demand early repayment under the cross-default clause, Suzlon said in a filing today. “There exists a material uncertainty” about the company’s ability to continue as a going concern, it said in the filing.
Vagadia said the company is negotiating a solution that will address all bondholders at once. “I’d have preferred to have a solution yesterday,” he said. “We are in active dialogue.”
The board approved a proposal to raise as much as 50 billion rupees through the issuance of shares, bonds or other instruments if necessary, the company said in a statement to the Bombay Stock Exchange today.
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