Mumbai: India’s largest wind turbine maker, Suzlon Energy Ltd, could issue fresh shares to existing shareholders, which analysts said would be used to retire debt.
The board of directors will consider the rights issue at their meeting on Saturday to discuss Suzlon’s financial results for fiscal 2010, the company told the Bombay Stock Exchange on Thursday.
Suzlon said the equity shares would have a face value of Rs2, but did not given any other details.
Analysts described the latest move as another in a series of attempts to reduce liabilities.
“The idea is to reduce debt,” said Chintan Mewar, equity analyst at Finquest Securities Pvt. Ltd, adding that it was a problem for the company.
“The company needs as much equity as possible, and a rights issue is probably the only way the company can raise money because in the current situation, neither a QIP (qualified institutional placement) nor a normal share sale, or even a private placement looks feasible,” said a analyst with a foreign brokerage, declining to be named because of company policy.
The firm has been trying to reduce its debt for a while now, and in November sold a 35% stake in Hansen Transmissions International NV to that end.
The next month, it took out a new five-year, $465 million (Rs2,213 crore today) foreign line of credit from the State Bank of India, which helped it cut its net outstanding debt of Rs13,500 crore to Rs11,800 crore.
Earlier this month, it lowered the conversion price of its foreign currency convertible bonds totalling $500 million to Rs97.26 per share from Rs359.68 and Rs371.55, respectively.
In October 2008, Suzlon suspended a planned Rs1,800 crore rights issue, citing unfavourable global market conditions.
Suzlon’s shares on Thursday dropped 0.94% to close at Rs58.15 apiece. The benchmark Sensex gained 1.70% to close at 16,666.4 points.
In the last year, the scrip has lost 35.21%, while the Sensex has risen 18.12%.