FCCB redemption: Suzlon bondholders reject extension plea for $221 mn debt

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

The bondholders' meeting was held in London on Wednesday.

The Foreign Currency Convertible Bonds (FCCBs) worth $220.8 million (about Rs 1,172 crore) were maturing on Thursday.

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

"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.

Following the development, shares of the company tumbled and fell over 3 per cent to Rs 16.05 on the Bombay Stock Exchange (BSE).

"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.

"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 $360.2 million in July this year. At present, the company has a debt burden of about $2.2 to 2.3 billion, Vagadia said.

According to him, the company's business remains normal and has a strong order book of more than $7.2 billion.

"We continue to enjoy the support and confidence of our secured lenders for our business objectives. We believe our ongoing engagement with them and our bondholders continues to be both constructive and progressive, and geared towards addressing our liabilities and our overall capital structure in a holistic manner," he added.

With inputs from PTI