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Suzlon proposes new FCCBs worth $485 million

Business Standard:  May, 2014

Mumbai: Wind energy equipment major Suzlon has proposed to issue new Foreign Currency Convertible Bonds (FCCBs) worth $485 million under restructuring exercise, giving it extra time to make payments to investors.

The company, promoted by Tulsi Tanti, had earlier failed to make payment on some of the bonds on due dates. The company and an ad hoc committee of bondholders have concluded negotiations and agreed on the proposed restructuring terms.

Suzlon, in a statement, said its board had approved cashless restructuring of its existing FCCBs. These bonds would have maturity of five years and one day from the date of issue. These bonds would mature in financial year 2019-20.

The conversion price for the bonds is pegged at Rs 15.46 — 10 per cent above the regulatory floor price. The approximate yield on instruments is five per cent.

The entire arrangement assumes earlier bonds in 2012, 2014 and 2016 will be substituted, including unpaid interest and default interest.

Further, it has signed a standstill agreement with the bondholders’ panel to facilitate the proposed restructuring of the existing bonds. The pact provides for a standstill period extending until August 15, 2014, Suzlon said.

The restructuring proposal, including terms of the new restructured bonds, are subject to the approval of the RBI, CDR empowered group and a requisite majority of bondholders.

Kirti Vagadia, Group Head – Corporate Finance– Suzlon Group, said the proposed cashless restructuring package for existing bonds was an optimal solution to “our last remaining piece under the comprehensive liability management programme and its value accretive for all our stakeholders”.

The company will convene separate meetings for bondholders of each series to consider and, if thought fit, to approve the restructuring proposal.

The company’s global spread extends across Asia, Australia, Europe, Africa and North and South America, with operations across over 30 countries and a workforce of over 10,000.