Suzlon Energy is likely to get a breather on Monday when its foreign currency bond holders may approve of the 45-day repayment extension sought by the loss-making wind turbine maker, saving it from default, experts tracking the development said.
Loss making-Suzlon has sought the extension from bondholders to repay FCCBs maturing on June 12 while it's trying to raise as much as $300 million in foreign currency loans to repay its $360 million liability.
The bondholders meet the company on Monday in London to take a call on it. "Suzlon's assurance that it would manage to raise funds for the repayment has given comfort to bondholders," said Bhargav Buddhadev, an analyst with Ambit Capital.
"The FCCB price has gone up and yields have fallen in the last 10 days, and there may have been some over-the-counter trade in the secondary market, indicating that bondholders expect the company to meet its obligation," he said.
According to Bloomberg data, the price of FCCB maturing in June soared almost 9% to 135 on Friday since May 18 when the company said it was at an "advanced stage" to tie up funds with around 20 lenders for the repayments.
The bondholders and analysts ET spoke to said that the bondholders had conveyed to Suzlon that they would not be interested in restructuring the FCCBs as they want redemption at the earliest.
Suzlon's management has been under duress for financing debt payment of $700 million in FY13, which includes FCCB repayment of $360 million in June and $209 million in October.
The company had to raise more loans after attempts to raise funds for payment of its liability through stake sale of non-core businesses, recovery of dues from its client Edison Mission, and internal cash flow did not yield much result.
Debt overhang and concerns over the company's ability to repay liability amid muted business has resulted in shares of Suzlon Energy falling 66% in the past one year to 18 as on Friday. BSE benchmark Sensex declined 9% in the same period.
The company management told ET that it may not require any further fund raising for repayment of its FCCBs in October and term loans this year.
"Our priority for FY12 would be to deliver our guidance, raise $100-200 million by sale of non-critical business, optimising working capital and strengthening our balance sheet," said Kirti Vagadia, chief financial officer of Suzlon told ET earlier. Analysts said they would be closely tracking the terms of the loan raised as it may be done at a high rate given that the company is highly leveraged.
