The World's #1 Renewable Energy Network for News, Information, and Companies.

Wind Turbine Manufacturer Suzlon Set to Default on Bond Debt

Wind Turbine Manufacturer Suzlon Set to Default on Bond Debt

Suzlon Energy Ltd., India's biggest wind turbine maker, will fail to repay $209 million of debt due today in the nation's largest convertible bond default. Its 2016 note slumped to a record.

Suzlon won’t be able to redeem two notes maturing today after bondholders rejected its request for a four-month extension, according to a statement sent to the Singapore stock exchange. The company’s default will total $209 million, and it has started talks with senior-secured lenders and bondholders on options, said two people familiar with the matter, who asked not to be identified because those details are confidential.

Suzlon, which has lost money for three years, has accumulated $2.8 billion in debt, including $965 million in revolving facilities, from acquisitions made before a global supply glut depressed turbine prices by 23 percent from their peak in 2009, according to data compiled by Bloomberg. The Pune- based manufacturer’s failure to pay will raise the amount of convertible defaults from India to $664 million this year and tops Sterling Biotech Ltd.’s $184 million delinquency in May, according to data compiled by Bloomberg.

The notes are unsecured, and Suzlon won’t be forced to liquidate assets or wind down operations, the two people said. Suzlon is expecting fresh working capital from its banks so that operations aren’t affected, they said.

The yield on the company’s $175 million, 5 percent convertible debt due April 2016 surged 7.7 percentage points to a record today, according to pricing data from KNG Securities. Its shares, which have lost 72 percent in the past two years, fell 2.4 percent to a three-week low of 16.15 rupees in Mumbai.

State Bank

The State Bank of India, Suzlon’s main lender, said the Indian banking system has loaned 140 billion rupees ($2.7 billion) to the turbine-maker, including 35 billion rupees from SBI.

“We are looking at ways to resolve the issue and need time to sort this out,” SBI Deputy Managing Director Santosh Nayar told reporters in Mumbai today. “The company followed a highly leveraged business model.”

Suzlon is under pressure to raise cash after a lack of working capital constrained its ability to complete orders in the quarter that ended June 30, Chief Financial Officer Kirti Vagadia said in August after the company reported its second- biggest quarterly loss since at least 2007.

The turbine maker expects to get $60 million by the end of this quarter from the sale of its Chinese manufacturing business, the people said. It agreed to sell the plant in June to China Power (Tianjin) New Energy Development Co.

It also filed a lawsuit last month against a unit of Edison International to recoup a $217 million payment by February for turbines supplied to an Illinois wind farm in 2009. Suzlon hasn’t satisfied the conditions necessary to trigger payment in February, Edison spokesman Douglas McFarlan said on Sept. 28.

High-Yield Bonds

Suzlon requested the extension on the bonds’ maturity to Feb. 11, saying it needed time to raise funds from sources, including fresh debt and the sale of non-critical assets, according to a Sept. 18 statement.

One plan was to raise as much as $500 million through a new high-yield bond issue this year. That still remains an option, the people said.

Suzlon’s request for a moratorium on the debt was the second this year. The company got a 45-day extension to avert default in June on $360 million of convertible notes. The bonds were repaid on July 27 after the company borrowed $300 million from banks and sold two Indian wind farms.

The bonds maturing today are a zero-coupon note with a face value of $200 million and a 7.5 percent note with a face value of $20.8 million. Suzlon will default on a total of $209 million after accounting for redemption premiums on the amount outstanding.

Copyright 2012 Bloomberg

Lead image: Default via Shutterstock

RELATED ARTICLES

Google

Greenpeace Raises Pressure on Internet Companies to Go Renewable

Andrew Burger, Contributor For at least four years, Greenpeace has been raising public awareness and putting pressure on the world's largest data and cloud computing center providers to fuel their operations with clean, renewable power. In May, Gree...
A biogas plant concept from Weltec Biopower

Europe Versus Renewable Energy?

Tildy Bayar, Contributor Wednesday morning’s 'Regulation and the Marketplace' panel discussion at POWER-GEN Europe in Amsterdam got off to a lively start with a presentation from Randy Mott, president of Polish biogas- and geothermal-bas...
Uzbekistan flag and map

Uzbekistan’s Ambitious Wind Power Target Signals New Energy Politics

Linas Jegelevicius, International Correspondent After rolling out its renewable energy strategy through 2019 in April, the Central Asian Republic of Uzbekistan has set its sights on ambitious goals: Build three 100-MW solar power plants and generate more than 1 trillion...
Wind turbines dusk

India's Solar Embrace Is Leaving Wind Power in the Shade

Anindya Upadhyay, Bloomberg

India is set to add more solar capacity than wind power for the first time as Prime Minister Narendra Modi looks to harness the sun’s rays to curb energy shortages.

CURRENT MAGAZINE ISSUE

Volume 18, Issue 3
1505REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

FEATURED PARTNERS



EVENTS

Doing Business in Brazil – in partnership with GWEC, the Global Win...

Brazil is one of the most promising markets for wind energy.  Ranke...

Mastering RETScreen® 4 for Clean Energy Project Analysis

Hands-on modeling class using RETScreen 4. Michael Ross designed this co...

RECAM WEEK

RECAM WEEK will bring together the incredibly successful SPG Central Am...

COMPANY BLOGS

Meteorological Technology International Magazine - SENSORS AND SENS...

Over the past 10 years, these sensing technologies have spread tre...

SunEdison Expands Residential Market Offerings with New PPA, Sales ...

SunEdison has largely focussed on the commercial and utility-scale solar...

Deadline for Inclusion in Solar Power World's Top Solar Contractors...

UPDATE: The official deadline for the Solar Power World T...

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS