Suzlon Energy Ltd. said creditors approved a plan to issue about $547 million of convertible bonds, helping India’s biggest defaulter on debt exchangeable into equity clear a fundraising hurdle.
Asia’s second-largest wind-turbine maker will offer the five-year securities as replacement for four older convertible notes, plus overdue interest, according to the restructuring plan. Investors holding its October 2012, July 2014 and April 2016 bonds voted in favor at meetings held in London yesterday, the company said in an e-mailed statement July 9.
Suzlon is leading gains this year among global wind-energy companies on expectations its recovery will be underpinned by a deal with bondholders and a new government in India that favors clean energy. The company, which hasn’t reported a profit since 2009, is seeking to recapture demand after its financial woes slowed its ability to carry out orders.
“Our debt problem is behind us,” Kirti Vagadia, Suzlon’s group head of finance, said by phone. “Now we can fully focus on business growth opportunities.”
Suzlon’s $90 million of zero-coupon notes due later this month traded at 95 cents on the dollar on July 4, the highest since June 2011, according to prices from Elara Capital Plc. Its $175 million of 5 percent debentures due April 2016 held at par, matching the highest since August 2011. Its stock has almost doubled in the past two months to 25.65 rupees ($0.43) as of 10:36 a.m. Mumbai, and is up 150 percent this year.
The Pune-based company is proposing the new bonds pay a 3.25 percent annual coupon for the first 18 months, and 5.75 percent thereafter to maturity, according to a memorandum sent to bondholders last month. The notes may be converted into Suzlon shares at 15.46 rupees apiece, according to the statement.
Suzlon expects to issue $546.9 million of new bonds on July 15, according to an exchange filing yesterday. They’ll replace the two lots of October 2012 notes, the July 2014 notes and $146.2 million of the $175 million April 2016 notes, including overdue interest.
Suzlon’s stock may come under pressure on concern investors will convert the new securities into equity, and then sell to pocket the difference, Antoine Bourgault, the head of credit research at ISM Capital LLP in London said in a July 7 interview.
Since Suzlon first announced plans to restructure its convertible debt May 3, it has regained its position as India’s top wind-turbine supplier from Wind World (India) Ltd. It installed 403 megawatts of turbines, or 19.6 percent share of the market, in the year ended March 31, data compiled by the Indian Wind Turbine Manufacturers’ Association show.
“I don’t think this impacts their market share but definitely, this will clear a big burden from the debt point of view,” Sudip Shah, chief executive officer at Orbit Investment Securities Services Plc in the U.K., said in an e-mail before the yesterday’s approval.