'Vestas target' Suzlon responds to $172m bond default claim

Indian wind group says debt reduction efforts ongoing after reports suggest talks with Danes expired

Suzlon said it will continue to pursue its debt reduction strategy as it reacted to claims it could default on $172m of bond payments, as no further update emerged on the progress of talks between the Indian wind group and a major new investor – reportedly Vestas.

Suzlon in a filing to the Mumbai Stock Exchange said it “continues to work on significant debt reduction, as committed,” after being asked to respond to an Indian media report that it could default on foreign currency convertible bonds (FCCBs) due in July.

Suzlon – which in May said it is targeting a 30-40% reduction in its debts – added that it “has been exploring various funding options like raising fresh equity, disposal of subsidiaries, etc. The company has been engaging with various experts, consultants and advisors in this regard, including FCCB holders”.

Suzlon posted a 15.3bn rupees ($220m) net loss for the latest financial year and its total debts stood at 111bn rupees at the end of May 2019.

Vestas €1bn Suzlon offer deadline passes with no deal: report

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The claims of an impending default came after a sharp fall in Suzlon’s share price yesterday, following reports that a deadline over an offer by Vestas worth roughly €1bn ($1.13bn) to take a controlling stake in the Indian group had come and gone with no deal.

A Suzlon auditor’s statement a few days earlier had confirmed the company was in talks over “a nonbinding offer from a potential investor”, valid until 3 June. There has been no statement from Suzlon on whether that deadline has been extended.

Vestas – which has never confirmed or denied it is pursuing Suzlon – told Recharge yesterday it would make no further comment on the matter, referring further inquiries to the Indian group.

Suzlon insists it is ideally placed to benefit from an impending boom in the Indian wind market as the country pursues its ambitious renewable energy targets. Its latest full-year results cited a third year of market share gains and a 1.3GW order book that’s “among the largest in the Indian wind industry”.

However, the group also cited a string of challenges in the Indian market – including land acquisition, delays to wind auctions and PPA approvals, and grid and military issues.

Suzlon’s debt was downgraded in April by Indian financial ratings CARE, which noted the company’s “stretched liquidity position”. It added: “This has been on account of impaired volumes resulting from wind industry’s transitionary phase and delay in monetisation of assets.”

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