Suzlon’s $221 mn FCCB default is India’s biggest

Wind turbine manufacturer Suzlon Energy has defaulted on $221 million worth of foreign currency convertible bonds (FCCBs) maturing on October 11, 2012, after it failed to get an extension from bondholders. This is the biggest FCCB default by an Indian corporate, topping Sterling Biotech's $184-million delinquency in May and takes the quantum of defaults on convertibles to $664 million this year, according to data compiled by Bloomberg.

The Pune-headquartered firm is promoted by Tulsi Tanti and posted a huge loss of Rs 850 crore in the three months to June 2012 following a loss of Rs 437 crore in the year to March 2012, when it reported revenues of Rs 21,082 crore.

Meanwhile, the consortium of lenders to the beleaguered firm, headed by State Bank of India (SBI), has said it would look at ways to restructure the company's debt now amounting to Rs 14,000 crore. SBI deputy managing director Santosh Nayar said the bank's exposure to the troubled company was Rs 3,500 crore.

The Suzlon stock closed 2.11 per cent lower at Rs 16.20 on the Bombay Stock Exchange, after falling to Rs 15.70 during the day.

At a meeting held in London on Wednesday, bondholders rejected a request by Suzlon for a four-month extension of the maturity dates of two series of FCCBs. "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, adding that the company was in talks with bondholders to find a solution.

Suzlon Energy had issued $200 million zero-coupon convertible bonds and $20.8 million 7.5 per cent convertible bonds, both due October 2012.

On September 18, Suzlon had requested bondholders for a four-month extension to allow it to close out financing measures and meet its redemption obligations in complete alignment with all stakeholders.

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