Shares of Suzlon Energy Ltd surged over 14% in early trade on Monday on reports that the company is offering to sell majority stake to Canadian investor Brookfield in order to settle loans.
An Economic Times report said Suzlon has told its lenders that Brookfield was keen to acquire a majority stake in it, which would help the company settle its loans if the lenders were to give a waiver.
The report added that Suzlon has offered a one-time settlement proposal to its lenders that entails potential stake sale to Brookfield and a considerable amount of waiver of the debts by lenders including foreign currency convertible bondholders. This could help the loss-making company to scale up its operations and meet the remaining financial obligations.
“Suzlon had interest from a few entities, which lenders knew, but it has decided to go ahead with Brookfield while submitting the one-time settlement offer,” the report quoted a person involved with the development as saying.
Suzlon hopes to complete due diligence in around a month and close the deal in 3-6 months, according to the report.
Suzlon had defaulted in repayment of principal and interest to lenders worth .Rs 412 crore towards term loans and working capital facilities as of end-March.
Suzlon has net term debt, including FCCB, of Rs 7,761 crore, and working capital debt of Rs 3,380 crore. In the latest March quarter, the company managed to narrow its loss to Rs 294.64 crore from Rs 469.85 crore a year ago, mainly due to lower expenses.
Suzlon’s total consolidated income from operations declined to Rs 1,450.47 crore in the fourth quarter, compared to Rs 2,189.18 in the year-ago period, the company said in a BSE filing.
Shares of Suzlon Energy were trading at Rs 5.20 apiece, up 14.3%, on BSE, while the Sensex was down 0.2%, or 80 points, to 39,114.93.
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