Suzlon is highly leveraged and following a downturn in the Indian wind market has struggled to keep up with debt repayments, especially on its Foreign Currency Convertible Bonds (FCCB), $209 million of which it failed to pay off in October.
In response to this, Suzlon has entered corporate debt restructuring (CDR), a process devised by State Bank of India to help major Indian companies facing liquidity issues to deal with their debts without the company going insolvent.
The proposal that Suzlon's lenders accepted last month is that the debts be repaid over a 10-year period, starting with a two year payment holiday. Payments are back-ended, so larger repayments are made towards the end of the decade.
One Suzlon insider told Windpower Monthly that the process would "allow the company the breathing room it needs to return to strength and match its revenue with debt repayments".
Suzlon and its bankers will now spend the next two financial quarters negotiating the details of the CDR plan, with a resolution likely to be announced early next year.
However, the CDR process can only apply to Indian-held debts and therefore covers around 85% of Suzlon's debts, at roughly $2.1 billion. CDR cannot help Suzlon solve its troublesome FCCBs, in particular the $209 million that was due in October. The company is continuing negotiations with its bondholders on a way of repaying the bond. The firm has another $121 million of FCCBs to pay back in July 2014 and $190 million in April 2016.
In addition to the CDR process and renegotiating its bonds, Suzlon continues to look to sell non-core assets, such as the $60 million sale of its equity stake in Chinese manufacturer Tianjin in June and the EUR142 million ($183m) sale of its stake in Hansen Transmissions late last year.
One asset Suzlon is determined to hold onto is German turbine manufacturer Repower. The precise nature of Suzlon's reliance remains unknown, as the firm reports only group financial results without breaking down these figures further. However, Windpower Intelligence figures show that turbine purchase agreements (TPA) total 3.1GW for projects currently being developed using the Indian company's turbines. TPAs for Repower turbines, meanwhile, stand at 4.4GW.
Due to banking convenants on Repower's debt and German regulations surrounding company ownership, Suzlon is only able to take a limited amount of Repower's revenues out of the company to use for wider group issues, such as debt repayment.
However, despite this restriction, analyst Ankush Mahajan, of the research department at Krchoksey Shares and Securities, said Repower's importance to the Suzlon group's overall health means that it is highly unlikely Suzlon would sell.
"GE, Vestas, and Gamesa are also struggling for profitability, so who will buy Repower at this time? If there's nobody to buy then there's no competition."
A Suzlon spokesman confirmed this, telling Windpower Monthly: "Repower is a critical asset. It is not for sale."