Suzlon's debt restructuring proposal gets formal aproval

Debt-laden Suzlon Energy on Thursday said that the empowered group of Corporate Debt Restructuring (CDR) Cell has given formal approval to its proposal to restructure domestic debt.

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.

"This is a major step forward in our efforts to achieve a sustainable capital structure. The terms of the package include enhanced working capital facilities, a reduction of interest rates of nearly three percent, and conversion of interest costs into equity, are key enablers towards normalizing our business," Kirti Vagadia, CFO, said.

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.

The Group's promoters will also bring in Rs 250 crore equity in a stipulated time frame, of which Rs 62 crore has already been infused, it added.

"Additionally we continue to be in constructive dialogue with majority of our bond holders across all the four series, and this development will help provide further visibility towards finding a consensual solution at the earliest," Vagadia said.

Suzlon shares closed down 3.5 percent at Rs 18 on NSE on Thursday. The announcement was made just around the time markets closed.