Suzlon moves a step closer to resolution as board approves allotment of securities

The board has also approved conversion of Rs 4,100-crore debt into optionally convertible debentures.

The board of Suzlon Energy has approved allotment of equity shares, optionally convertible debentures (OCDs) and warrants of the company to lenders, in a meeting held on Saturday evening. The approval by the board takes the company a step closer to the implementation of the resolution plan. FE reported earlier that the resolution plan for Suzlon may be implemented by June 30, as lenders and promoters have been able to resolve differences on the deal structure.

In an intimation to stock exchanges, Suzlon said that the board has approved allotment of 99,71,76,872 equity shares to lenders. “99,71,76,872 fully paid up equity shares having a face value of Rs 2 each aggregating to Rs 16, i.e. at an aggregate consideration of Rs 1 per lender,” Suzlon said. The board has also approved conversion of Rs 4,100-crore debt into optionally convertible debentures. Apart from this, the board has approved allotment of warrants to lenders.

The committee of creditors (CoC) had already approved the resolution plan given by the promoters in March 2020. The resolution plan, however, could not be implemented due to several delays owing to Covid-19. Therefore, the deadline for implementation of the plan was revised till June 30, 2020.

Under the approved resolution plan, a large portion of the company’s debt was to be converted into sustainable and unsustainable portion, which was to be repaid over 20 years. The resolution plan implied around 60% haircut for financial creditors on the total debt of Rs 12,785 crore. The promoters of the company had agreed to infuse `375 crore into the company as equity.

Suzlon’s lenders entered into an inter-creditor agreement (ICA) on July 7, 2019, to find a resolution for the company. The lead creditors to Suzlon include State Bank of India, Axis Bank, Bank of Baroda and ICICI Bank, among others.