India

India

Suzlon receives formal approval for $1.8 billion debt plan

INDIA: Turbine manufacturer Suzlon has been given formal approval from its banks of its $1.8 billion corporate debt restructuring (CDR) plan.

The plan was signed off by the CDR Empowered Group, which includes representatives of Industrial Development Bank of India, ICICI Bank and State Bank of India. Suzlon's 19 lenders have also signed off the plan.

The CDR plan was unveiled by Suzlon in October. At the same time, it suspended its guidance for 2012.

Suzlon, which has been struggling with debt repayments, will get a two-year moratorium on principal and term-debt interest repayments, as well as a six-month moratorium on working capital interest. It also includes a 3% reduction on interest rates.

Additionally, $270 million representing two-years' interest will be converted into equity. A working capital of $350 million will also be provided.

The deal does not affect the $220 million owed to bondholders, which Suzlon was supposed to repay in October. Suzlon chief financial officer Kirk Vagadia said the company remained in "constructive dialogue" with this group of lenders.

Speaking about the deal, Vagadia said: "This is a major step forward in our efforts to achieve a sustainable capital structure. The terms of the package include enhanced working capital facilities, a reduction of interest rates of nearly 3%, and conversion of interest costs into equity, are key enablers towards normalising our business.

"I am confident that with this CDR package, we will quickly return to a position of stability and confidence for our customers, vendors and employees."

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