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SBI, 15 others sell over Rs 8,000-crore Suzlon loans to REC and IREDA

SBI, 15 others sell over Rs 8,000-crore Suzlon loans to REC and IREDA


A group of 16 banks led by () has sold more than Rs 8,000 crore in loans to the Rural Electrification Corporation () and the state-owned Renewable Energy Development Agency of India (IREDA), clearing his books of an account that has been a drag for nearly a decade and a half.

The loan sale concluded even as the wind power company was in the midst of its second bank-led restructuring begun in 2020. The REC- and IREDA-led refinancing would extend the life of Suzlon’s loans and also carry a lower interest rate. lower than paying the banks, said several people familiar with the outlines of the deal.

“It’s beneficial for both the banks and the company. The banks are getting rid of a troubled account that shows no signs of recovery.”

You get a better payment schedule and a cheaper interest rate, which makes the company’s financial position more sustainable,” said a person familiar with the deal.

According to the restructuring initiated by the banks in 2020, Suzlon’s gross debt of ₹11,000 crore was divided into sustainable (₹4,000 crore), unsustainable (₹3,000 crore) and part of it it was converted into equity shares (₹4,000 crore).

“According to the restructuring plan, the company had time until 2028 to pay its installments at an average interest rate of 11%. Now, the new refinancing provides time until 2030 and an initial interest rate of 9.5%, which it’s a very good deal for Suzlon. Also, now with the repayment of installments, the non-performing asset (PNA) The label that the banks had put on the company is off and some banks can afford to rewrite provisions this quarter,” said a second person familiar with the transaction.

In a stock exchange notice dated May 25, Suzlon had said that REC and IREDA’s specialist knowledge of the electricity sector would put them in a better position to address the group’s specific needs and allow adequate operational flexibility for efficient operation. of the company. business.

“We have completed our debt refinancing activity, replacing our 16 lenders with two new lenders who have specialized domain knowledge in the electricity sector. This move will support our plans for future growth,” the company said in response to inquiries. from ET.

REC and IREDA did not respond to an email seeking comment.

Under the agreement, the banks will continue to have an equity stake in the company with the conversion of optionally convertible debentures (OCD) and mandatory convertible preference shares (CCPS). Banks also do not need to keep a lock on the stake they hold and are free to sell it on the open market as they wish.

SBI is the largest banker with ₹2,900 crore of dues outstanding, followed by BoB with ₹1,550 crore and

with ₹1.5 billion rupees in a consortium of 16 banks.

“The fact is that any recovery from this account seemed doubtful. The infusion of capital from the developers was also taking time. The banks have made the best decision based on the information available. If we are lucky, we can get some advantage over the shares we have. . For now, it’s up to REC,” said a third person familiar with the transaction.

Source : bullstrade


Anand Gupta Editor - EQ Int'l Media Network