Suzlon Energy Ltd has yet to meet a key condition in its race to meet a deadline early next month to seal a Rs113bn ($1.6bn) debt restructuring, raising questions about its ability to stave off bankruptcy.
The Indian wind turbine maker hasn’t secured the credit rating it needs to present a restructuring offer to creditors, who must approve a recast plan before January 7 or tip Suzlon into bankruptcy to avoid punitive provisions, said a person familiar with the matter.
If the restructuring attempt were to fail, Suzlon would be the latest in a long line of Indian companies in the nation’s nascent bankruptcy courts.
Companies have struggled as banks that are stuck with $130bn of bad loans have curtailed lending in a floundering economy.
A Suzlon spokesman said that discussions with lenders were progressing well, and the company is actively engaged in seeking a resolution to the restructuring process.
He declined to comment on specifics.
Suzlon’s troubles come as India’s Narendra Modi-led government has focused on competitive auctions to award wind projects, squeezing tariffs, and forcing developers to pass on the lower margins to turbine manufacturers.
At the heart of Suzlon’s current restructuring stalemate is its inability to get a threshold rating required by India’s central bank on restructured debt, said the person, who asked not to be named.
Suzlon’s attempted plan envisions a non-cash swap for its Rs113bn in onshore borrowings that would split the debt into two buckets.
One of those would be serviced regularly, while the other would be junior, and paid out when the company could afford to do so.
However, Crisil Ltd, the rating assessor that Suzlon hired, had indicated that its assessment was that Suzlon wouldn’t be able to regularly service the amount of debt that lenders had asked the company to give them in the proposed restructuring plan, the person said.
A Crisil spokeswoman couldn’t immediately comment. If Suzlon’s current restructuring plan is executed, it would be its third in a decade.
The company has defaulted in the past partly as the result of its ambitious debt-financed acquisition of REpower Systems in Germany in 2007 that left the Indian company with a pile of debt.
Suzlon paid over €1.2bn ($1.3bn) for REPower at the time. Suzlon would later shed REpower, now called Senvion SA, in a €1bn deal in 2015 with private equity firm Centerbridge Partners.
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