Suzlon Energy gets investment grade rating after five years2 min read . Updated: 08 Oct 2015, 07:54 PM IST
Care Ratings assigns a 'CARE BBB-' credit rating for Suzlon's long-term bank facilities and fund-based working capital limits worth Rs4,936 crore
Mumbai: For the first time in five years, debt-laden wind turbine maker Suzlon Energy Ltd has managed to secure an investment grade credit rating for its long-term loan facilities.
Credit Analysis and Research Ltd or Care Ratings has assigned an investment grade to the Tulsi Tanti-controlled firm’s outstanding bank facilities and to the proposed commercial paper issue.
In 2012, Suzlon Energy’s loan facilities was assigned ‘D’ or default rating by agencies, signalling potential default.
On Thursday, Suzlon Energy said Care Ratings has assigned a ‘CARE BBB-’ credit rating for the company’s long-term bank facilities and fund-based working capital limits worth ₹ 4,936 crore.
‘CARE A3’ credit rating was assigned for the firm’s non-fund based working capital limits and proposed commercial paper worth ₹ 10,550 crore. The rating is valid till 15 September 2016.
To be sure, Suzlon Energy managed to secure investment grade rating in March from Care Ratings for ₹ 100 crore in short-term working capital. However, the rating agency has also now upgraded the company’s long-term loan facilities to investment grade.
“We are pleased to announce that we have been upgraded to investment grade (BBB-) from D rating (in 2012). The rating clearly demonstrates our restored credibility on account of significant deleveraging, strong industry outlook, our sizable order book, order pipeline and strong operating performance," Kirti Vagadia, chief financial officer, Suzlon Group said.
“We have maintained strict discipline from the beginning of the current financial year towards timely payment of all our financial obligations," he said.
As on 31 March 2015, Suzlon Group had a total debt of ₹ 17,810.96 crore. In January 2013, the company’s creditors approved a ₹ 9,500 crore debt restructuring plan, agreeing to enhance working capital limits by ₹ 1,800 crore and backed a 10-year deferred repayment plan.
In May 2014, Suzlon Energy announced a restructuring of existing foreign currency convertible bonds (FCCBs) worth $485 million for five years, after nearly two years of complex negotiations with bondholders.
Pune-based Suzlon Energy had failed to repay $209 million of debt on 11 October, 2012 after bondholders rejected its request for a four-month extension. At the time, it was the biggest default on convertible bonds by an Indian company.
Earlier this year, Suzlon Energy had signed definitive agreements with Dilip Shanghvi Family and Associates (DSA) for equity investments of ₹ 1,800 crore in the company.
DSA’s investment came immediately after Suzlon Group sold 100% stake in its wholly owned subsidiary Senvion SE to Centerbridge Partners LP, US for €1 billion (approximately ₹ 7,200 crore) in an all-cash transaction.
For the June 2015 quarter, Suzlon Energy reported its first consolidated net profit in 14 quarters thanks to a one-time gain. Excluding this, the company reported a pre-tax loss of ₹ 280 crore, lower than the loss of ₹ 630.5 crore in the year-ago June quarter.
“While a strong credit profile definitely helps in getting timely and cost effective finance, it is also a big credibility booster for various stakeholders, which is extremely critical in our industry," Vagadia of Suzlon Group said on Thursday.