Suzlon Energy offers to repay $1.2 bn for stressed debt settlement

India’s troubled wind-turbine maker Suzlon Energy Ltd. offered to repay about 85 billion rupees ($1.2 billion) to lenders as part of a bad-debt resolution plan, people with knowledge of the matter said.

Creditors led by State Bank of India will have to take a haircut of as much as 44% on Suzlon’s debt if the offer is accepted, the people said, asking not to be named as the information isn’t public. The settlement plan backed by Vestas Wind Systems A/C is the only bid in front of lenders after Brookfield Asset Management Inc. dropped out of the race, one of the people said.

Suzlon shares rose as much as 14% in early Mumbai trading on Friday, the biggest intraday gain in two weeks.

The Pune-based manufacturer has been embattled after Prime Minister Narendra Modi’s government shifted to auctions in 2017 as the preferred method to install wind projects. That limited orders for domestic turbine manufacturers amid rising operational costs and stiffer competition from global players.

“It is a tough situation for Suzlon with tight competition, amid rising operational costs and funding costs,” said Mathew Antony, managing partner of Aditya Consulting. “The company needs strategic investors with long-term investment window of at least 10 years.”

Representatives for SBI and Suzlon didn’t respond to emails seeking comment. Suzlon’s long-term bank facilities were downgraded to D from BB in April by Care Ratings and the company missed payments on its dollar-denominated convertibles last month.
Bloomberg