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Suzlon Energy, a wind energy firm, intent to convert some of its debt of roughly Rs 4,100 crore into equity has been authorized by an Indian lender. The creditors’ ownership would climb to 35 percent, while promoter Tulsi Tanti’s holding would fall to 12.7 percent from 16 percent following the dilution.
REC, a power sector lender, would increase its stake in Suzlon to 4.3 percent by making new loans to the company, which would be used to repay earlier loans.
The State Bank of India, Suzlon’s principal bank, accepted the funding request on February 16, and other current lenders are in the process of receiving permission from their respective regulators.
The plan calls for the company’s full outstanding optional convertible debentures (OCDs) worth Rs 4,100 crore to be converted into equity shares, providing the lenders with an advantage.
The refinancing strategy calls for preferentially issuing warrants to REC, which will eventually be transformed into stock. After the deal is finalized, the stake of public stakeholders will be reduced to 36.4 percent.
Suzlon and some of its subsidiaries entered a debt restructuring arrangement with a syndicate of lenders led by the State Bank of India in June 2020.
The resolution plan went into effect on June 30, 2020, and it calls for Suzlon to give current lenders an escape from the restructured facilities.
As a result, Suzlon proposed a plan for the refinancing of existing lenders’ outstanding restructured facilities, which included full repayment of part of their debt by taking a new loan from REC, OCD conversion, asset sales, and compulsorily convertible preference shares issued by Suzlon to existing lenders into its equity shares.
The firm struggles for existence after being heavily affected by the outbreak in FY 21 when it ended the year with a loss of Rs 400 crore on income from operations of Rs 1000 crore.
The firm reported in its third-quarter results that it continued to lose money, that the group’s net value was a negative Rs.3,356.40 crore as of December 31, 2021, and that it had a responsibility to clear the principal sum to the creditors, including Rs 450 crore due on June 30.
The firm intends to pay its financial commitments through a variety of methods, including cash flows from operations by executing orders in the pipeline, the realization of trade receivables and financial assets, future business plans, and the sale of non-core assets.