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Web Exclusive | October 2012

Lenders to consider Suzlon Energy's debt recast

Key lenders to Suzlon Energy are considering debt recast of the company after it failed to receive a rollover of FCCB holders. On October 11, Suzlon Energy said that bondholders have disagreed to rollover $220 FCCB for four months.

Deputy Managing Director of State Bank of India Santosh Nayak, the current default $220 million is not much considering the company's overall debt profile. But it has other implications. The bank has to negotiate with bond holders and arrive at a settlement, he added.

He said that Suzlon has outstanding loan of Rs 14,000 crore of which SBI has fund based exposure - which includes guarantees of Rs 1,000 crore and a non fund based exposure of Rs 2,500 crore.

He indicated that FCCB holders may either choose to be part of restructuring exercise that domestic banks undertake or choose their own course of action. But he was quick to add that FCCB holders are primarily unsecured creditors and therefore they would stand behind secured lenders if there is a winding up petition against the company.

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