According to reports, cash-strapped wind turbine maker Suzlon may have got the in-principle approval for restructuring its debt of over Rs 14,000 crore but bankers are unlikely to give in to all the company’s demands.
According to well-placed sources, the company has demanded capital to the tune of Rs 6,500 crore from the lenders as part of the corporate debt restructuring (CDR) exercise, in addition to asking bankers for a two-year moratorium and fixing the interest rate at 11%.
According to sources, the CDR exercise will involve a sacrifice on the part of lenders to the tune of Rs 1,000 crore. Of this, the promoter will have to bear Rs 250 crore. The promoter will have to make an upfront payment of Rs 125 crore once the bankers agree on the terms for the restructuring to even start.
Bankers are expected to meet this week to take a final call on the CDR exercise. As reported by ET NOW last week, Suzlon was given what is known as a ‘flash approval’ for the CDR.
Suzlon has asked bankers to provide the company with fresh loans of Rs 2,000 crore to meet payment requirements, Rs 3000 crore as a working capital loan and an additional Rs 1,500 crore to meet interest payment obligations.
According to a senior PSU banker involved in the CDR process, “bankers are keen to complete Suzlon’s restructuring as soon as possible, but it is unlikely that all the company’s demands will be met, especially in terms of the capital that it has asked for.” While the interest rate may be fixed at 11% for the repayments, bankers may be inclined to raise this but it may not be feasible given the cash-flow of the company, added a source.
Suzlon has a debt of over Rs 10,500 crore to a consortium of Indian banks, led by State Bank of India. The company also has two overseas subsidiaries which owe Indian banks Rs 3,500 crore. In addition, it has an outstanding FCCB commitment of Rs 2,500 crore. SBI has the largest exposure to the company at about Rs 3600 crore.
A Suzlon spokesperson declined to comment on the story.
Under corporate debt restructuring, the consortium of lenders to a troubled company takes a collective decision to help it by reducing the interest rate and extending the loan payment tenure. This year has seen a record amount of corporate debt restructured at over Rs 40,000 crore for the first half of the year.