An inside look at the complex restructuring that saved Suzlon. By Nandini Lakshman in Mumbai
In April the world’s fifth largest wind energy turbine maker, Suzlon, wrapped up a US$1.8 billion corporate debt restructuring (CDR) package, the largest CDR in India to date. “It is an inter-creditor and debtor-creditor agreement with the objective to save the company and make it viable by financial measures so that the banks get their money back,” says Anand Desai, the managing partner at Mumbai-based law firm DSK Legal.
The lender consortium, which has an exposure of around US$2.2 billion in Suzlon, provided the company with US$220 million in working capital to keep its operations alive. Seven banks account for 80% of the CDR package, which includes a 10-year extension to repay the loan, an interest rate reduction from 14% to 11%, a two-year moratorium on principal and term-debt interest payments, enhancement of working capital facilities and providing equity to the lenders. Besides this, the company is being nudged to hive off unwanted assets, reduce headcount and improve operational efficiencies.