Wind turbine maker Suzlon today announced the divestment of its German arm Senvion for USD 1 billion in order to repay debt. Central Bank of India, that had lent to the company expects its exposure to reduce by 45-55 percent post this deal, says executive director RK Goyal.
Goyal also expects all term loan obligations until March 2015 to be paid off by the company.
Suzlon today said it will repay domestic term loans worth Rs 5000 crore with the proceeds from the sale. It further said it will use Senvion’s offshore technology by paying a license fee.
Below is the verbatim transcript of RK Goyal's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: Can you tell us exactly how much is coming to the lenders after Senvion is sold off?
A: When we issued the no objection certificate (NOC) upon the information the company gave to us, they will repay loans to the extent of Rs 5,000 crore. Out of this money, they are proposing to repay term-loan installments which are due till March 2015. That means another three months installments. They are supposed to pay debt service reserve account (DSRA) worth Rs 500 out of this amount and the balanced amount they are reserving for their business need because they are short of cash, they have liquidity issues.
Latha: What is the balance amount?
A: Around Rs 1,200-1,300 crore.
Latha: So the total they are making is Rs 6,200 crore in this deal?
A: What I understand it is one billion euro which comes to around Rs 8,400 crore.
Latha: And of this Rs 8,400 crore, Rs 5,000 crore is coming to the lenders?
A: Yes.
Latha: How much is your own exposure and how much are you getting paid back?
A: I cannot give figures as such. We have substantial exposure on this.
Latha: And it will fall by what percentage?
A: It should come down by around 45-50 percent as far as our exposure is concerned. It is not the case with all the banks reason being those banks which have financed for that particular acquisition which they did in 2007-2008, that loan only will be paid off.
Latha: So the financiers to the RE Power purchase will get paid off?
A: Yes. That is one thing plus all term loan obligations, which are due till March 2015 will be paid off.
Latha: Who are the biggest lenders to the RE Power deal? Were you the biggest, who are the others?
A: I don’t remember names.
Latha: Can you tell us at least a few other banks who are like you, who will be advantaged?
A: I think most of the banks will be at advantage, all the banks which are there in the consortium they have either similar or bigger portion in that RE Power.
Latha: Is there anything else that Suzlon has promised under the corporate debt restructuring (CDR), should we expect more asset sales?
A: No, only thing is once this money comes in, naturally their liabilities will come down. This is mainly for the purpose of managing their liability and naturally their losses will also come down because they were having huge losses from RE Power. They will be efficient to rebalance their operations in India and in the near future, hopefully they will come out of these losses.
Latha: You don’t have any idea as to how much therefore their profit will fall because they must also be getting profit from Senvion, isn’t it? We are given to understand that Senvion was making profits of about 146 million euros in the last financial year, do you have any idea how much their revenues of the consolidated entity will come down?
A: As far as I remember based upon the discussions we had in the last meeting, 2013-2014 they had net loss of around Rs 3,500 crore and out of that their Indian operation loss was only Rs 900 crore so that means their foreign operations loss was around Rs 2,600 crore. Major portion must be coming from Senvion only. This is what I remember.
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