Suzlon Said to Be in Talks for $2.5 Billion Sale of SenvionGeorge Smith Alexander, Abhishek Shanker and Dinesh Nair
Suzlon Energy Ltd., Asia’s second-biggest wind-turbine maker by capacity, is in talks with potential buyers about a sale of its German business, people with knowledge of the matter said.
The company could raise about $2.5 billion from a sale of Hamburg-based Senvion SE, the people said, asking not to be identified because the information is private. Senvion has drawn interest from Chinese companies and a large buyout fund, according to the people, who didn’t identify the suitors.
Suzlon, which suffered India’s biggest convertible-bond default in 2012, is seeking to emerge from a debt reorganization program by the end of March. Chairman Tulsi Tanti told analysts on a Nov. 3 conference call that he’s “very serious” about reducing borrowing levels and freeing up more capital for projects.
“The move will give Suzlon a lifeline they needed to better their balance sheet,” said Raj Kothari, a fixed-income trader at Sun Global Investments Ltd. in London. “It’s a very positive news for the bond holder and also for the company as the valuation they are getting is fair.”
Suzlon will keep the market updated about all its strategic plans “once approved by the board,” it said in an e-mail, adding any report of such a sale is “baseless” and “speculative.”
Shares of Suzlon rose 9.2 percent in Mumbai, the biggest gain in more than a month, to 15.40 rupees, the highest closing level since Sept. 24. They jumped as much as 17 percent earlier in the day.
The Pune, western India-based company will proceed with plans for an initial public offering of Senvion if it can’t agree on terms with potential buyers, the people said. Suzlon is working with BNP Paribas SA, Deutsche Bank AG and Morgan Stanley on a possible share sale for the business that could raise about 600 million euros ($712 million), people with knowledge of the matter said in April.
Suzlon’s debt rose to 173.2 billion rupees ($2.7 billion) at the end of September, from 133.6 billion rupees three years earlier, data compiled by Bloomberg show. It began making repayments in October after a two-year debt holiday ended.
As of Sept. 30, the company had 89 billion rupees of local-currency debt and dollar borrowings of $1.27 billion, including working capital, according to an investor presentation on its website.
Senvion, formerly known as Repower Systems SE, makes offshore wind turbines. The company is a “marquee” asset, and European capital markets are showing an appetite for renewable-energy companies again, Suzlon Group Head of Finance Kirti Vagadia said last April.
Earnings before interest, taxes, depreciation, and amortization of Senvion rose 22 percent in the year through March 31, while revenue dipped 19 percent in the same period, according to the presentation. Last month, the company won four wind-turbine orders in the U.K. totaling 63.5 megawatts, Suzlon said in an e-mail on Dec. 22.