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Moser Baer Plans to Revamp Loans, Bonds Amid Solar Glut

Moser Baer India Ltd., the nation’s biggest solar manufacturer, plans to restructure $738 million of loans and bonds as it jostles to survive a supply glut that has claimed at least 10 U.S., German and French panel makers.

The company expects to reach an agreement with banks to restructure 35 billion rupees ($646 million) of secured debt by August and may sell new five-year bonds to pay off dollar-convertible notes maturing in June, Chief Financial Officer Yogesh Mathur said in a phone interview from New Delhi. Its 2013 zero-coupon bond is trading at 35 cents on the dollar.

Solar panel prices have plunged 48 percent in the past year amid overproduction led by Chinese manufacturers and dwindling demand in Europe, the largest market for the equipment. Moser Baer and Indian peers such as Indosolar Ltd. are producing at 20 percent of capacity as sales sputter and industry margins collapse globally, Bloomberg New Energy Finance said in January.

“The time certainly is not the best” for a new issuance, said Atul Gharde, a Hong Kong-based credit analyst at SJS Markets Ltd. “Chinese solar companies are struggling and the yields of those bonds are at distressed levels.” Even if Moser Baer were to attract an anchor investor, selling new bonds could be “quite challenging,” he said.

Moser Baer dropped 0.5 percent to 11.05 rupees at 10:28 a.m. in Mumbai, extending yesterday’s plunge to a 13-year low. The yield on its zero-coupon bond due in June rose 2.4 percent to a record, according to data compiled by Bloomberg.

Failing to Benefit

The biggest panel suppliers including China’s Suntech Power Holdings Co. and Tempe, Arizona-based First Solar Inc. say India is about to become one of the fastest-growing solar markets, countering waning demand in Europe, where governments are curtailing clean-energy subsidies. The government seeks to turn India into a global hub with rules aimed at spawning 5 gigawatts of domestic solar manufacturing capacity by 2020.

Moser Baer and local competitors failed to benefit from a 50-fold increase in solar power capacity in India since December 2010. Instead, overseas suppliers reaped most of the equipment orders, said K. Subramanya, former chief executive officer of Tata BP Solar India Ltd. who resigned this month.

Moser Baer, which makes solar panels and the silicon-based cells used in them, has $89 million of convertible bonds maturing on June 21, according to data compiled by Bloomberg.

The New Delhi-based company is negotiating with bondholders to either extend the tenure or issue fresh notes to pay them off, Mathur said. Its cash balance has fallen below $15 million, he said.

Indian companies may default on 20 percent of $7 billion in dollar-denominated convertible bond payments due in 2012, Fitch Ratings said in a report on Feb. 21. Moser Baer and XL Energy Ltd., a Secunderabad-based competitor, were among 16 companies identified in the report as likely to reorganize debt.

“Overall, this isn’t good news for the Indian convertible bond market,” Raj Kothari, a London-based bond trader at Sun Global Investments Ltd., said of Moser Baer’s plans.

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