Suzlon Energy Ltd., the wind-turbine maker responsible for India’s biggest convertible-bond default, reached an agreement with investors to restructure $485 million of notes.
The board has approved the deal to issue new five-year convertible bonds maturing in the financial year ending March 2020, Pune-based Suzlon said in an e-mailed statement. The conversion price has been set at 15.46 rupees, it said.
They will be step-up bonds, meaning the coupon rate will rise over the five years, and the yield will average out to approximately 5 percent, according to the statement.
The deal is “an optimal solution to our last remaining piece” of a program to reduce liabilities, Kirti Vagadia, head of finance of the Suzlon Group, which also owns German offshore turbine maker Senvion SE, said in the statement.
The agreement with bondholders follows a year and a half of negotiations prompted by the company’s failure to repay $209 million of notes in October 2012. That default also triggered a clause allowing holders of a further $265 million of 2014 and 2016 bonds to demand immediate repayment.
The restructuring covers all of the 2012 and 2014 notes and half of the 2016 ones, according to the statement.
Suzlon’s share price has slumped to 13.4 rupees from a record 454.6 rupees on Jan. 8, 2008, as it struggled to pare 160 billion rupees ($2.7 billion) of debt. That leverage was racked up in overseas acquisitions before the global financial crisis dried up funding for wind farms, causing a turbine-supply glut and depressing prices.