Suzlon repays $780 million acquisition loan

Suzlon repaid the $780 million debt through the proceeds from a 35% stake sale in Belgium\'s Hansen Transmissions and a new five-year dollar-denominated loan of $465 million from SBI.

Wind turbine maker Suzlon Energy has announced that the company has repaid its entire outstanding acquisition loan facility of approximately $780 million. This repayment has helped the company to reduce its gross debt by approximately 15% to $350 million.

However, it has hardly made any difference to the stock price. On Friday, the scrip closed at Rs82, down about 1% from the previous day’s close after opening at Rs83.20 and hitting a high of Rs84.40.
The repayment was made mainly from the proceeds of a partial stake sale in Hansen Transmissions International NV, along with a new five–year US dollar-denominated loan of $465 million from the State Bank of India (SBI). As per the company’s announcement, the $465 million loan from SBI provides for a two–year moratorium on repayments of principal as well as a two-year holiday on debt covenants.

Speaking about the transaction, Supratim Sarkar, vice president, SBI Capital Markets Ltd, said he strongly believed in Suzlon’s long-term business prospects and business model. He also expressed confidence in the company’s potential as an Indian leader in the global wind energy market, especially since renewable energy solutions will gain more prominence in future to mitigate climate change.
Meanwhile, Suzlon’s chief operating officer Sumant Sinha said this transaction concludes the first phase of the refinancing exercise and it has improved the company’s debt profile, with a debt reduction of 15% or nearly $350 million since September 2009. He said the company would continue to work towards optimizing its capital structure.

Rothschild is the financial advisor for Suzlon’s debt restructuring programme. SBI Caps was the sole financial advisor on the dollar facility, while for the rupee facility SBI Caps was the global coordinator and lead arranger along with IDBI Bank.

Recently, Suzlon Energy sold a 35% stake in its subsidiary, Hansen Transmissions, for $370 million, or about Rs1,720 crore, as part of its efforts to reduce debt. Post stake sale, Suzlon\'s shareholding in Hansen declined to 26% from 61%. This is the second divestment of Suzlon\'s stake in Hansen this year, with the firm selling 10% in January to the London-based investment firm Ecofin. Suzlon had bought the Belgium-based Hansen in 2006 for $565 million (about Rs2,656 crore).

Suzlon Energy\'s order book as on 30 October 2009 stood at Rs8,285 crore, which is 1.15 times its sales of Rs7,235.58 crore for the year ended March 2009, giving strong revenue visibility.
For the current fiscal year that ends in March 2010, the company revised its full-year sales guidance to a range of 1,900MW to 2,100MW.

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    Mukesh Ambani ranked 5th best CEO in the world

    Mukesh Ambani, the only Indian to feature among the top 50 CEOs, is in the same league as Steve Jobs of Apple, Yun Jong-Yong of Samsung Electronics, Russian energy firm Gazprom\\\'s Alexey Miller and John Chambers of Cisco Systems

    Mukesh Ambani, who heads India\\\'s most valuable company Reliance Industries Ltd (RIL), has been ranked among the top five best-performing chief executive officers (CEOs) in the world by the prestigious Harvard Business Review (HBR).

    Mr Ambani, the only Indian to feature among the top 50 CEOs, is in the same league as Steve Jobs of Apple, Yun Jong-Yong of Samsung Electronics, Russian energy firm Gazprom\\\'s Alexey Miller and John Chambers of Cisco Systems.

    He is also ranked number two among the top 10 emerging market CEOs with Mr Miller at the top.

    KV Kamath of ICICI Bank Ltd is the other Indian in the list of Top 10 Emerging Market CEOs. He is ranked at the ninth spot.

    HBR said it ranked CEOs of large publicly-traded companies in a study conducted over 2,000 CEOs worldwide. The entire group represented 48 nationalities and companies based in 33 countries. It put Ambani in the list of "up-through-the-ranks leaders" along with the Samsung boss.

    "Among the up-through-the-ranks leaders on our list are Yun Jong-Yong, who joined Samsung straight out of college and worked there 30 years before becoming CEO, and Mukesh Ambani, who joined RIL in 1981, when it was still a textile company run by his father.

    "These CEOs may not all be household names, but here\\\'s an objective look at who delivered the top results over the long term," HBR said, ranking Steve Jobs as the top CEO in the world.

    Mr Jobs, it said, delivered a whopping 3,188% industry-adjusted return (34% compounded annually) after he rejoined Apple as CEO in 1997, when the company was in dire straits. From that time until the end of September 2009, Apple\\\'s market value increased by $150 billion.

    He was followed by Yun Jong-Yong, who ran South Korea\\\'s Samsung Electronics from 1996 to 2008. "Yun is an example of a leader who has stayed out of the limelight. During his tenure he capably transformed Samsung from a maker of memory chips and me-too products into an innovator selling digital products such as leading-edge cell phones," said HBR. Mr Miller was at the third spot followed by Mr Chambers.

    HBR said that none of the top three CEOs had an MBA. Mr Ambani and Mr Chambers were the only two in the top five to hold degrees in business administration.

    "CEOs who were promoted from inside the company tended to have stronger performance than those brought in from the outside," said HBR.

    Several CEOs that were "most respected" according to other reviews were nowhere in HBR\\\'s top 50. They include Jamie Dimon of JPMorgan Chase, Satoru Iwata of Nintendo, Sam Palmisano of IBM and Rex Tillerson of Exxon Mobil.

    Many other celebrity CEOs also failed to make the cut. They include Carlos Ghosn of Renault-Nissan, Sergio Marchionne of Fiat, John March of Morgan Stanley, Jeffrey Immelt of General Electric, Daniel Vasella of Novartis and Robert Iger of Walt Disney.

    "Some of these well-known CEOs have not necessarily done poorly; they are just not among the top performers in the world according to the total shareholder return they have delivered so far," HBR said.

    The likes of Jack Welch, Warren Buffett, Larry Ellison and Bill Gates do not find mention in the list as HBR considered CEOs who assumed the job no earlier than January 1995 and no later than December 2007.

    "On an average, the top 50 CEOs increased the wealth of their shareholders by $48.20 billion," it said. They delivered a total shareholder return of 997% during their time in office. That translates into a spectacular annual return of 32%.

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    "Tyche Industries flouts disclosure"

    Tyche Industries fails to make timely disclosure of acquisition of stake in the company by another group company

    It looks like companies have succumbed to the habit of bending the rules dictating corporate governance practices. Moneylife has regularly pointed out cases where such companies and their promoters openly flout regulations at the cost of investors and customers. Tyche Industries is another instance where the company has failed to make the mandatory announcement in changes to its public shareholding pattern.

    Apparently, the company underwent a change in public shareholding late last year, when its group company Tyche Chemicals was shown holding a 14.88% stake in the March 2009 shareholding pattern. However, the same company was not in the December 2008 disclosed shareholding pattern.

    The public shareholding with more than 1% voting rights in the company stood at 2.21% in December quarter 2008, which subsequently rose to 17.08% in March 2009. According to the Securities and Exchange Board of India (SEBI) guidelines on acquisition of shares, any acquisition of shares in a company entitling the acquirer to more than 5% or 10% of the voting rights in the company, is required to be disclosed to the stock exchanges within seven working days of such acquisition.

    The SEBI Substantial Acquisition of Shares and Takeovers Regulations, 1997, specifies that “any acquirer, who acquires shares or voting rights which (taken together with shares or voting rights, if any, held by him) would entitle him to more than 5% or 10% or 14% share or voting rights in a company, in any manner whatsoever, shall disclose at every stage the aggregate of his shareholding or voting rights in that company to the company and to the stock exchanges where shares of the target company are listed.”

    Interestingly, in the case of Tyche, shareholding among promoters has also undergone a change in this period. G Sandeep, who held 14.11% in Tyche Industries as on December 2008, sold 5% stake to another promoter G Ganesh Kumar. This change comes to light in the March 2009 disclosed shareholding pattern. Under the SEBI guidelines, such sale of stake between promoters of the same company to the extent of 5% or more also requires an announcement to that effect.

    Tyche Industries responded to Moneylife’s query saying that Tyche Chemicals was holding stake from 2002 onwards, which was shown in the ‘corporate bodies’ category of shareholders. However, the company still has to disclose the name of the concerned parties holding more than 1% of the total shareholding, which Tyche Industries has not done.

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