Suzlon Energy faces serious debt crisis

The world’s fifth largest maker of wind turbines needs to repay foreign currency convertible bonds of US$360 million in June and US$207 million in October.

Suzlon Energy, Ltd is battling against strong headwinds as it tries to raise up to US$500 million in overseas bonds to repay debts due this year. It needs to repay foreign currency convertible bonds of US$360 million in June and US$207 million in October.

Finance chief Kirti Vagadia said high-yield bonds would be raised in time to repay the debt, but did not give a timeline or or the banks the company was working with.

He said Suzlon will leverage cash flows and assets from its international business to raise fresh debt. He also squelched rumors Suzlon was intent on selling REPower, its German subsidiary, to raise cash to repay its debt.

Once an investor darling, Suzlon has struggled since the global financial crisis of 2008. The company’s shares are 95% below their record high in November 2007.

Some analysts doubt the bond plan's chances of success as investor appetite for high-yield bonds from emerging markets is dwindling and business prospects in the short term for the renewable energy sector are not cause for optimism.

Suzlon's foreign currency bonds mature this year and are trading far above their current price, making them unattractive for bondholders to convert into shares.

Suzlon operates the largest wind park in the world, the 584 MW wind park in the Eastern Ghats-Tamil Nadu.