Banks okay Rs 9,500 cr Suzlon bailout

Domestic lenders, comprising 19 banks led by State Bank of India, have approved the Rs 9,500 crore ($1.8 billion) loan bailout package of the Suzlon group with several concessions.

The empowered group of corporate debt restructuring (CDR) cell has formally okayed a package that includes a two year moratorium on principal and term-debt interest payments, a three per cent reduction in interest rates and six month moratorium on working capital interest. Further, the cell has agreed to convert Rs 1,500 crore (two year's interest payment during moratorium) into equity or equity-linked instrument over the next two years to bring stronger financial stability and approve a 10 year door-to-door back-ended repayment plan.

The package also includes an enhancement of working capital facilities, by around Rs 1,800 crore, allowing the company to accelerate the execution of its strong orderbook. The group's promoters will also bring in equity to the extent of Rs 250 crore into the company in stipulated time frame, of which Rs 62 crore has already been infused.

Speaking on the development, Kirti Vagadia, chief financial officer, Suzlon Group, said, "This approval clearly underscores the fundamental viability of our business. This is a major step forward in our efforts to achieve a sustainable capital structure. I am confident that by this CDR package, we will quickly return to a position of stability and confidence for our customers, vendors and employees."

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