Bondholders of Suzlon Energy plan legal action post default: Report
As banks are unlikely to take a steep haircut on their Rs 10,300 crore exposure, an informal deal with Brookfield seems to be off the table
August 07, 2019 / 04:53 PM IST
Following the default on repayments by India’s largest wind turbine maker -- Suzlon Energy, its bondholders plan to initiate legal action against it, reports Business Standard. Legal firm Kirkland & Ellis has been hired by bondholders to chart out a strategy for further action.
As banks are unlikely to take a steep haircut on their Rs 10,300 crore exposure, an informal deal with Brookfield seems to be off the table. The Canadian asset management company had earlier offered to takeover Suzlon, provided banks took a sharp haircut. However, lenders could not reach an agreement with the company on the amount that they were expected to forego.
A senior banker told The Economic Times that Brookfield has asked lenders to take a 60-70 percent haircut on their debt.
In mid-July, Suzlon defaulted on its foreign currency convertible bonds (FCCB) worth $172 million. Following this, secured creditors of the firm had signed an inter-creditor agreement, which allowed lenders to arrive at and implement a strategy towards resolution of the stressed account.
Brookfield was in talks to infuse fresh equity in the company, sources told the paper. This would have led to a reduced promoter stake in the company. Sources additionally told BS that provided Sun Pharmaceutical Industries' promoter Dilip Shanghvi brings in proportional amount to buy fresh stakes, he would be able to retain his existing stake in the company.
Suzlon reported a loss of Rs 7,413 crore in FY19. Thereafter, it missed it deadlines for debt repayment and was downgraded to default category by CARE Ratings.
Suzlon has said that it is not aware of any action being contemplated by the bondholders and has added it can’t comment upon the intentions of bondholders. The company has said it has not received any communication on bondholders’ taking action against it.
Suzlon added that it is working towards a holistic solution for its debt and is in discussions with the various stakeholders in relation to its outstanding debt including bonds.
(Note: The article has been updated with comments from the company.