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Suzlon Lenders Approve $1.8 Billion Debt Reorganization Plan

Jan. 24 (Bloomberg) -- Suzlon Energy Ltd., India’s biggest wind-turbine maker, said lenders approved a 95 billion rupee ($1.8 billion) debt-restructuring plan and a two-year moratorium on principal and interest payments.

A consortium of 19 banks led by State Bank of India approved the proposal to reduce the interest rate by 3 percent and extend repayment by eight years after the moratorium, which begins Oct. 1, Pune-based Suzlon said in a stock exchange statement, which didn’t give the current rates of interest.

Suzlon on Oct. 11 failed to pay $209 million, the biggest convertible note default by an Indian company. The wind-turbine maker continues to be in negotiations with bondholders, Chief Financial Officer Kirti Vagadia said in the statement.

The founders will invest an additional 1.88 billion rupees in the company, following an infusion of 620 million rupees in December, according to the statement.

“The restructuring of the domestic debt will help Suzlon successfully defend its leadership position when the Indian wind market bounces back in six to nine months,” said Ashish Sethia, India country manager for Bloomberg New Energy Finance.

BNEF expects installations in the country to fall about 40 percent after a subsidy for wind farms was withdrawn. The incentive helped annual installations in the world’s third-biggest wind market to more than double from 2009 to 2011.

Suzlon fell 3.2 percent to 18.05 rupees at the close in Mumbai today. The shares have dropped 32 percent in the past year, compared with a 17 percent gain in the benchmark Sensitive Index.

The wind-turbine maker can raise 18 billion rupees for working capital needs from the banks, according to the statement. The interest of 15 billion rupees due over the next two years will be converted into equity or an equity-linked instrument after the moratorium ends.

To contact the reporter on this story: Ganesh Nagarajan in Chennai at gnagarajan1@bloomberg.net

To contact the editor responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net

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