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Suzlon founders sell shares to fund Repower purchase

Suzlon founders sell shares to fund Repower purchase
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First Published: Mon, May 25 2009. 09 41 PM IST

 More stake: A Suzlon power plant in Jaisalmer, Rajasthan. The firm needs funds to pay Martifer this month to boost its Repower stake. Harikrishna Katragadda / Mint
More stake: A Suzlon power plant in Jaisalmer, Rajasthan. The firm needs funds to pay Martifer this month to boost its Repower stake. Harikrishna Katragadda / Mint
Updated: Mon, May 25 2009. 09 41 PM IST
Mumbai: Mumbai-listed Suzlon Energy Ltd said its founders, the Tanti family, sold about 60 million shares, or 4% of the company’s equity, to help fund the purchase of a stake in German unit Repower Systems AG.
More stake: A Suzlon power plant in Jaisalmer, Rajasthan. The firm needs funds to pay Martifer this month to boost its Repower stake. Harikrishna Katragadda / Mint
The Tanti family now owns 60% of Suzlon after the sale, which will part-finance the buyout of the stake held in Repower Systems by Martifer SGPS SA, the Ahmedabad-based company said in an emailed statement on Monday. This stake sale will ensure that the overall timeline in implementation of Repower integration is not delayed.
Suzlon is raising funds to buy an additional stake in Repower from Portugal’s Martifer.
Suzlon needs funds to pay Martifer €175 million (Rs1,158.50 crore) this month to boost its Repower stake to 91% and complete the transaction. The founders don’t expect a need for a further stake sale, Suzlon said on Monday.
“This is a very big positive for the company,” said Lokesh Garg, a Mumbai-based analyst at Kotak Securities Ltd. “It indicates the management’s commitment to complete the buyout.”
The company’s stock fell 84% last year on concerns that its equipment was faulty as the US customers cancelled orders after Suzlon Energy’s blades cracked. The stock’s decline forced Suzlon to scrap plans for a $368 million (Rs1,736.96 crore) rights offer aimed at raising funds to buy an additional stake in Repower.
The wind turbine maker has offered to sell as many as 60 million shares at a discount of up to 3% to the stock’s closing price on 22 May in a transaction managed by Citigroup Inc., ‘Reuters’ reported on Monday.
Suzlon had 60.69 million shares, or 4.1% of its equity, traded in a single transaction on the Bombay Stock Exchange on Monday, according to ‘Bloomberg’ data. The stock fell 5.5% to close at Rs88.8.
The founders sold the shares for $120 million, ‘Reuters’ reported, citing a term sheet. Suzlon didn’t indicate the value of their sale in its statement.
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First Published: Mon, May 25 2009. 09 41 PM IST