Suzlon’s debt recast package fails to impress bankers

Despite Rs 10,829-crore debt recast package of Suzlon being referred to the corporate debt restructuring (CDR) cell, the package doesn't have the go-ahead from a majority of bankers, said a senior banker close to the development. However, bankers say that unlike some of the recent high profile cases, Suzlon is not a write-off case and banks are working towards a recast package.

At the November 8 meeting of the empowered group of lenders at CDR cell, Suzlon did not receive the necessary mandate from the bankers for admission into the cell. "As of now only SBI and its associate banks have approved the package. The consortium of bankers will be regularly meeting in the coming days to work out a negotiated debt recast package," the senior banker said.

On the sidelines of the State Bank of India's quarterly results conference held on November 9, Pratip Chaudhuri, the SBI chairman, said, "The banks have referred Suzlon to the CDR cell because we feel there is a case for restructuring. The problem is that Suzlon took short-term liabilities but its buyers will pay over the long term. So, there is a mismatch." He added the company is in the clean energy space which will do well in future and its orderbook looks strong. A banker from IDBI Bank said, "Suzlon is not a write-off case because it is in a promising business segment with a strong subsidiary in Germany."

Suzlon's main lenders are SBI with an exposure of around R3,500 crore, IDBI Bank with around R1,700 crore, Bank of Baroda at R1,000 crore and Indian Overseas Bank at R1,000 crore. Some of the other lenders to the group with smaller exposures include ICICI Bank, Axis Bank and Yes Bank. The CDR cell typically requires 75% of banks (by value) and 60% of them (by number) to agree to resolve the case under the CDR mechanism.

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