Debt-laden Suzlon Energy, which last month got formal approval from banks to restructure its loans, says it can raise about USD 0.5 billion from selling non-critical assets. However, Kirti Vagadia, its CFO, maintained that there is no plan to sell its German unit REpower, which is among the fastest growing in the industry.
Debt-laden Suzlon Energy , which last month got formal approval from banks to restructure its loans, says it can raise about USD 0.5 billion from selling non-critical assets. However, Kirti Vagadia, its CFO, maintained that there is no plan to sell its German unit REpower, which is among the fastest growing in the wind energy industry.
The non-critical assets sale may pan out over next 2-3 years, he told CNBC-TV18 on Monday.
A consortium of 19 banks approved the CDR package of Rs 9,500 crore (USD 1.8 billion), the wind turbine maker said in a notice to stock exchanges on Jan 24.
The package includes a two year moratorium on principal and term-debt interest payments; a three percent reduction in interest rates and six months moratorium on working capital interest.
As a part of the package, Rs 1,500 crore (two year's interest payment during moratorium) will be converted into equity or equity linked instrument over the next two years to bring stronger financial stability and a 10 year door-to-door back-ended repayment plan.
There will also be an enhancement of working capital facilities by about Rs 1,800 crore, which will allow Suzlon to accelerate the execution of its strong orderbook, it said.
In addition, the group's promoters need to bring in additional equity of Rs 250 crore , of which Rs 62 crore has been already infused.
Currently promoter stake is at around 50 percent, Vagadia said.
The Pune-based company continues to see good order flow. Last week it won two major orders -- to supply 66 wind turbines to the Cookhouse Wind Energy project in South Africa and REpower's largest ever order to supply 175 turbines to a project in Quebec, Canada.
Suzlon shares were down 1.4 percent at Rs 24.80 on NSE in morning trade on Monday. The stock has gained 39 percent since it announced banks approval for the CDR package on Jan 24.
Below is an edited transcript of Kirti Vagadia's interview on CNBC-TV18
A: Yes. CDR in India is a nice scheme available for a viable company and is a joint effort by promoters and lenders to come out of temporary mismatch of cash flow. In Suzlon we do have a temporary conflict between business and debt payment which is a classic conflict for any company when the cash flows are lower. Whether you allot to bank liabilities or you allot to business, this is a classic conflict we were passing through and in consultation with our senior secure lenders we have decided to go for CDR.
Secondly, we are getting an additional working capital of USD 350 million.
Thirdly, our interest rates stand reduced by more than 300 basis point (bps) which is going to reduce our cost.
Fourthly, we are getting interest converted into loan and loan getting converted into equity so the interest for two years is getting converted into equity.
Suzlon Energy stock price
On November 27, 2015, Suzlon Energy closed at Rs 21.70, down Rs 0.25, or 1.14 percent. The 52-week high of the share was Rs 31.35 and the 52-week low was Rs 12.15.
The latest book value of the company is Rs -2.82 per share. At current value, the price-to-book value of the company was -7.70.
READ MORE ON Suzlon Energy, wind turbines, supply, debt, restructuring, Kirti Vagadia, CFO, REpower, CDR
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