Mumbai: India’s biggest maker of wind turbine generators, Suzlon Energy Ltd, said it is evaluating options on an offer to change the terms of $500 million (Rs2,485 crore) of convertible bonds after some debtors rejected the plan.
Financing acquisitions: Suzlon’s wind turbines in Jaisalmer, Rajasthan. The firm proposed the changes in a bid to reduce its liabilities. George Frey / Bloomberg
Holders of five-year bonds issued in June 2007 passed the amendment resolution at a meeting on 29 April, while investors in bonds issued in October 2007 didn’t approve the proposal, Suzlon said in a statement to the Bombay Stock Exchange on Monday.
“This is negative for the company,” said Chintan Mewar, a Mumbai-based analyst at Finquest Securities Pvt. Ltd, who has an “outperform” rating on the stock. “It means that they may have to either revise their offer or have another round of talks with their bondholders to convince them.”
Suzlon issued zero coupon bonds worth $300 million and $200 million, due in June 2012 and October 2012, respectively, to help finance the acquisition of Hamburg-based REpower Systems AG.
The wind-turbine maker has to complete the purchase of additional shares in REpower from Portugal’s Martifer SGPS SA this month.
The?Ahmedabad-based company proposed the changes in a bid to reduce its liabilities. Suzlon offered to swap new bonds for old, a cash payment or a combination, according to a statement issued to stock exchanges on 31 March.
The wind-turbine maker’s shares gained 3.61% to Rs65.95 in Mumbai trading, after climbing as much as 6.6% to the highest level since 16 April.
The 30-share benchmark Sensex index climbed 5%.
It isn’t reflecting negatively on the stock’s movement because of the overall buoyancy in the market, Mewar said.
The conversion price for new bonds that may be issued to debt holders as an incentive to agree to the proposed changes was set at Rs76.6755 a share at an exchange rate of Rs49.8112 a dollar, Suzlon said in a statement to the stock exchange on 27 April.
Suzlon Energy paid Martifer €30 million (Rs198.3 crore) as part payment for a stake in REpower on 30 April, the Portuguese company said in a statement on its website.
The Indian company needs to pay the remaining €175 million to complete the purchase of the 22.4% stake.
Suzlon said on Monday its stake in REpower has increased to 76% after paying Martifer. Its shareholding will rise to 91% after the remaining amount is paid.