In another sign of worsening financial strain on wind turbine maker Suzlon Energy, the company failed in its efforts to get an extension on the redemption deadline.
The company, which has not registered a profit for the last three years, has about $220 million worth of bonds that are maturing today.
“I regret to announce today that the bondholders’ meetings did not achieve the consensus we were hoping for and the four-month extension sought by us has not been granted,” Kirti Vagadia, Chief Financial Officer, Suzlon Group, said in a press release.
The company had earlier said it would need an extension for the redemption of FCCBs as it was facing a funds crunch. It was looking to raise debt or sell non-core assets.
However, with the bondholders refusing to extend the deadline, the company now faces a default. A report in the Economic Times says key lenders are considering debt recast of the company.”The current default $ 220 million is not much considering the company’s overall debt profile. But it has other implications. we have to negotiate with bond holders and arrive at a settlement,” the report quoted Santosh Nayak, deputy managing director of State Bank of India as saying.
Shares of Suzlon Energy on Thursday declined 4 percent to Rs 15.90, reacting to the news.
The stock has been on a free fall over the last six months. The prices of wind turbines have been declining due to a supply glut, a Bloomberg report said on Wednesday.
Over the last six months Suzlon shares have fallen 32 percent, while the Nifty has risen 8 percent. Adding to the worries of the company, which is in severe financial trouble, is a plan by Multi-Fix, a Dutch company that has supplied spares, to sue it over dues, a Bloomberg report said.
“We called them 100 times, and we also sent someone to India to try to get payment. Now we have a lawyer working on a winding-up petition if they don’t pay,” Multi-Fix Chief Executive Officer Arthur Burgmans was quoted as saying in the Bloomberg report.
The company had earlier said that it was not able to execute the orders in the April-June quarter due to want of working capital, the report said.
However, Vagadia says in today’s release that Suzlon enjoys “the support and confidence of our secured lenders for our business objectives”.
“With an order book in excess of US$7.2 billion, we believe the business can – and will – stabilise and the Group’s senior management is committed to restoring the company to a position of strength,” he said.
High hopes, do we dare say?