Update: Suzlon bond holders reject $221m payments extension
Suzlon's bond holders have rejected a request for a four-month extension on redeeming the company's $221m of October foreign currency convertible bond (FCCB) payments, the Indian wind turbine company says.
Chief financial officer Kirti Vagadia says: "I regret to announce today that the bondholders' meetings did not achieve the consensus we were hoping for."
But he adds: "We continue to enjoy the support and confidence of our secured lenders for our business objectives. We expect that an acceptable solution for all stakeholders will be arrived at the earliest possible [time]."
Industry sources point out that the FCCB debt is unsecured, and that bond holders have an interest in reaching a settlement with Suzlon over a new payment schedule.
Suzlon is confident that its senior secured-lenders remain supportive of the business – with officials pointing to its $7.2bn order book – and would be willing to increase their lending if necessary, in order to enhance the company's working capital.
However, the banks are likely to stipulate that any expanded credit facility is not used to pay bond holders – who would be last in line if the company was no longer able to continue as a going concern.
Discussions with the bondholders are continuing, and an agreement over a new payment schedule seems to be the most likely outcome.
Suzlon issued $200m in zero-coupon convertible bonds and $20.8m in 7.5% convertible bonds, both falling due this month.
It requested the four-month extension on 18 September "to allow it to close various financing measures and meet its redemption obligation in complete alignment with all stakeholders".
Suzlon says that a new high-yield bond issue remains one of several options open to it.
The company is continuing with its programme to sell non-critical assets, with a target of $100m-200m in the current fiscal year.
It has so far realised $40m from asset sales in India, and is in the process of finalising the sale of its China manufacturing operations to raise another $60m.
However, company officials say that German turbine manufacturer REpower "is a critical asset and an extremely important part of the group, and not for sale".
Suzlon also announced an initiative in August – called Project Transformation – to cut operating expenditure and manpower costs by 20% by the end of 2013.
Update adds further detail from industry sources