Wind energy firm, Suzlon has readjusted its agonizing debt with the help of the consortium lenders. Suzlons’ settlement of the nearly ten thousand crore debt is a good sign for a dozen of India’s corporate extending from DLF to Kingfisher who have accumulated large debt in this difficult period.
About the development, Suzlon statement mentioned that “The empowered group of corporate debt restructuring CDR) cell comprising 19 lenders today formally approved our CDR proposal to recast Rs 9,500 crore of domestic debt. The package is effective from October 1, 2012 and does not include our foreign currency debt.”
Suzlon’s debt is an outcome of its acquisition of the German power firm RePower. The acquisition was a quite aggressive one costing the Tulsi Tanti Management nearly ten thousand crores. The Indian firm has battled with French firm Areva and Portuguese firm Martifer to successfully complete the bid. Many observers though appreciated Suzlon’s firepower in the bid, have questioned RePower’s price tag.
A major obstacle with respect to its synergy with RePower was that the Indian firm was not able to use the cash resources of the German firm due to objections from the German regulators. This has deepened the debt incidence of the deal.
In the just concluded CDR, many banks insisted on selling RePower, but Suzlon management resisted it fearing low bid in the wake of the present dull market. In the case of Suzlon with its good asset base, it was fairly comfortable for the lenders to readjust its loan, unlike in the case of Kingfisher. There are still a large number of firms in the country now who are facing big debt problems. Air India has an outstanding debt of around Rs 40000 crores, comprising sovereign debt. DLF has nearly Rs 25000 crores, and BSNL has so far accumulated Rs 9000 crores as loss. DLF is following slump sale of its properties to tide over crisis. Other firms are anticipating the CDR Mechanism to solve their problems.