Mumbai, April 4: Suzlon Energy, the wind turbine maker, is selling a block of wind assets for Rs 200 crore ($40 million) as part of a plan to meet looming debt obligations this year.
In a communication to the stock exchanges, the Pune-based company today said the transaction would conclude by the middle of next month after completion of due diligence and requisite approvals. The windfarms are located across India, with majority of the assets in Tamil Nadu.
Kirti Vagadia, chief financial officer of the Suzlon Group, said the step was part of the company’s strategy to optimise its capital structure and meet repayment obligations this year.
The asset sale comes when foreign currency convertible bonds (FCCBs) worth $569 million (Rs 2,910 crore) are coming up for redemption over the next few months. The company will have to pay $360 million to some bond holders in June and another $209 million in October.
There have been fears recently that the company may default on the FCCBs given its cash flow position and inability to raise fresh funds. This comes when there are concerns of delayed payments from some of its big customers.
In a recent report, brokerage HSBC said the wind energy maker might fall short of Rs 750 crore when the first tranche of FCCB comes up for redemption in June.
FCCB is a hybrid instrument of bond and stock. The subscriber to the bond can opt for either principal plus interest at maturity or he can convert the bond into equities at a pre-determined conversion price.
However, as conversion prices are far higher than the current stock prices of these companies, the FCCB investors are not resorting to this option.
Suzlon, however, indicated today that meeting the redemption requirement should not be a problem as it had seen the highest-ever order book in February this year at $7.5 billion, and there was also a strong execution pipeline for the current fiscal.
The sale of wind assets did not provide much aid to the Suzlon stock today as it ended up with losses of nearly 2 per cent at Rs 25.15 on the BSE.