Suzlon Energy Ltd., India’s second-biggest wind-turbine maker, expects as early as next week to gain an extension on $209 million of defaulted debt, said three people with direct knowledge of the matter.
Suzlon, based in the western Indian city of Pune, has been in talks with bondholders for a five-year extension for the dollar-denominated convertible debt, said the people, asking not to be identified before an announcement. The company failed to repay investors in October 2012, in the nation’s biggest convertible-bond default.
Suzlon has $5.2 billion of bonds and loans outstanding, according to data compiled by Bloomberg. The company will need to redeem $121 million of zero-coupon, dollar-denominated convertibles in 2014, and another $190 million of debt exchangeable into equity in 2016, the data show.
“Because of a cross-default clause, if the 2012 bonds get a maturity extension, the 2014 and 2016 bonds will likely be extended,” said Hemant Dharnidharka, the Bangalore-based head of credit research at SJS Markets Ltd. “If the bonds are restructured as per the deal, then the company could focus more on its business and less on managing its finances.”
Suzlon, scheduled to report quarterly results on Feb. 14, won’t comment on speculation, it said yesterday in an e-mail. Shares rose 0.9 percent to 11.55 rupees as of 11:06 a.m. in Mumbai. The stock has dropped 57 percent in the past year, compared with a 2.7 percent gain in the S&P BSE Sensex Index.
The company may seek to raise as much as $750 million through an initial public offering of its German unit REpower Systems SE on the London Stock Exchange by August, CNBC-TV18 reported Jan. 21. Proceeds from the share sale would repay Indian lenders and German banks owed as much as 750 million euros ($1 billion) by the unit, CNBC said.
Suzlon failed to redeem $175.8 million of zero-coupon notes and $32.8 million of 7.5 percent bonds that fell due in 2012, according to data compiled by Bloomberg. The company sold $647 million of five-year notes, backed by State Bank of India, last year, it said in a statement in March 2013.
In an October interview, Suzlon’s Group Chief Financial Officer Kirti Vagadia attributed the lengthy negotiations with the creditors to the complexity of dealing with four sets of bondholders across different regions and regulatory regimes.