Suzlon bondholders reject extension of debt redemption

Making it one of the major Indian companies to default on debt obligations, Suzlon Energy today said bonderholders have rejected its proposal seeking four-month extension to repay debt worth about USD 221 million while expressing hope that things would be sorted out at the earliest.

The Foreign Currency Convertible Bonds (FCCBs) worth USD 220.8 million (about Rs 1,172 crore) were maturing today and the company was hoping to get bondholders' nod for more time to repay the debt.

Following the development, shares of the company tumbled and fell over three per cent to Rs 16.05 on the BSE.

"It is somewhat disappointing that the bondholders' meetings did not achieve the consensus we were hoping for and the four-month extension sought by us has not been granted," Suzlon Group Chief Financial Officer Kirti Vagadia said.

Such a development is not good for any company, he said.

"We were confident of raising the funds to meet the obligations within that four months... We are continuing our engagement with bondholders and expect to have an acceptable solution at the earliest," he said.

Many Indian companies, including Suzlon, have raised money through issue of FCCBs. In recent times, Suzlon has been grappling with rising debt and stiff competition in global markets.

Suzlon had issued USD 200 million Zero Coupon Convertible Bonds and USD 20.8 million 7.5 per cent Convertible Bond. The company on September 18 had sought extension for redeeming these bonds.

The bondholders' meeting was held in London yesterday.

"We did not have enough quorum (of bondholders) with respect to the zero coupon convertible bonds while the response was not positive when it came to those holding 7.5 per cent convertible bonds," Vagadia said.

The company had redeemed FCCBs to the tune of USD 360.2 million in July this year.

At present, the company has a debt burden of about USD 2.2 to 2.3 billion, he added.

... contd.

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