Wind turbine maker Suzlon Energy has announced that the company has repaid its entire outstanding acquisition loan facility of approximately $780 million. This repayment has helped the company to reduce its gross debt by approximately 15% to $350 million.
However, it has hardly made any difference to the stock price. On Friday, the scrip closed at Rs82, down about 1% from the previous day’s close after opening at Rs83.20 and hitting a high of Rs84.40.
The repayment was made mainly from the proceeds of a partial stake sale in Hansen Transmissions International NV, along with a new five–year US dollar-denominated loan of $465 million from the State Bank of India (SBI). As per the company’s announcement, the $465 million loan from SBI provides for a two–year moratorium on repayments of principal as well as a two-year holiday on debt covenants.
Speaking about the transaction, Supratim Sarkar, vice president, SBI Capital Markets Ltd, said he strongly believed in Suzlon’s long-term business prospects and business model. He also expressed confidence in the company’s potential as an Indian leader in the global wind energy market, especially since renewable energy solutions will gain more prominence in future to mitigate climate change.
Meanwhile, Suzlon’s chief operating officer Sumant Sinha said this transaction concludes the first phase of the refinancing exercise and it has improved the company’s debt profile, with a debt reduction of 15% or nearly $350 million since September 2009. He said the company would continue to work towards optimizing its capital structure.
Rothschild is the financial advisor for Suzlon’s debt restructuring programme. SBI Caps was the sole financial advisor on the dollar facility, while for the rupee facility SBI Caps was the global coordinator and lead arranger along with IDBI Bank.
Recently, Suzlon Energy sold a 35% stake in its subsidiary, Hansen Transmissions, for $370 million, or about Rs1,720 crore, as part of its efforts to reduce debt. Post stake sale, Suzlon's shareholding in Hansen declined to 26% from 61%. This is the second divestment of Suzlon's stake in Hansen this year, with the firm selling 10% in January to the London-based investment firm Ecofin. Suzlon had bought the Belgium-based Hansen in 2006 for $565 million (about Rs2,656 crore).
Suzlon Energy's order book as on 30 October 2009 stood at Rs8,285 crore, which is 1.15 times its sales of Rs7,235.58 crore for the year ended March 2009, giving strong revenue visibility.
For the current fiscal year that ends in March 2010, the company revised its full-year sales guidance to a range of 1,900MW to 2,100MW.