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HindustanTimes Sat,19 Apr 2014

‘Suzlon to go in for $2-bn debt recast’

Reuters  Mumbai, November 27, 2012
First Published: 21:43 IST(27/11/2012) | Last Updated: 21:44 IST(27/11/2012)

Lenders to Indian wind turbine maker Suzlon Energy Ltd, which last month defaulted on a $200 million convertible bond redemption, have agreed to restructure about Rs. 110 billion ($1.97 billion) of its debt, sources with direct knowledge of the situation said on Tuesday.

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Shares in the world’s No 5 wind turbine maker, which has been squeezed by debt and tight working capital, were up more than 10% after Reuters reported that it had been admitted to the country’s corporate debt restructuring (CDR) process.

The rupee debt — which was due in five and six years — will be restructured with a two-year moratorium on interest and principal repayment, after which the loans will be repaid over eight years at a lower rate, one of the sources said, declining to be identified.

Another source who declined to be identified said details were still being finalised  with discussions around reducing interest on the loans from 14% to 11%.

The restructuring does not apply to Suzlon’s overseas bonds and does not ease the company’s net debt, which stood at about R130 billion at the group level at the end of June, but it does give Suzlon space to fund operations.

Suzlon, which announced its intention to enter the debt restructuring process late last month, declined to comment.The debt to be restructured is held by about 20 Indian banks  led by State Bank of India, the country’s largest lender, which had exposure to the company of about $659 million as of last month.

Suzlon is the latest big Indian firm to win a reprieve from lenders, which have proven willing to renegotiate terms with large but troubled companies, prompting some critics to warn about moral hazard.

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