The cash-free settlement resolves the company's dispute with bondholders after it defaulted on the buyback of foreign currency convertible bonds in October 2012, making it the biggest default of its type ever by an Indian company.
However, in order to win over bondholders, the company has had to issue bonds with a value well over that of the defaulted bonds, which were worth $221 million. This deal also covers bonds due to mature this July and in April 2016, bringing the total to $285.8 million.
The company said it has also received the approval of watchdog the Corporate Debt Restructuring Empowered Group for the restructuring proposal and the approval of the Reserve Bank of India, subject to "certain conditions".
New 5% bonds should be issued on 15 July and will mature on 16 July 2019.
The turbine manufacturer originally issued $200 million zero-coupon convertible bonds and $20.8 million 7.5% convertible bonds but was forced to ask for a four-month extension from bondholders. The request was refused, forcing the default.
While investors will breathe a sigh of relief at this latest news, Suzlon still has substantial debts that it must deal with. It is attempting to refinance a EUR 750 million loan from Deutsche Bank that is due for renewal in August.
Shares in the firm climbed 5% on the Bombay Stock Exchange on the news.