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Lenders voted to allow Suzlon Energy Ltd. (SUEL), the Indian wind-turbine maker that defaulted on convertible bonds, to revamp about 110 billion rupees ($2 billion) of domestic debt, two people with knowledge of the matter said.
Suzlon will seek to restructure about 80 percent of its 140 billion rupees of debt, said the people who asked not to be identified because the information isn’t public. Suzlon is seeking a two-year moratorium on all repayments and interest costs followed by an eight-year payback period, one of the people said.
Suzlon surged 11 percent, the most in almost four months, to 17.10 rupees at the close in Mumbai. The company declined to comment, saying negotiations with lenders were confidential.
India’s corporate debt restructuring rules, set by the central bank, allow viable companies additional time to meet debt obligations. Suzlon’s lenders have 90 days to approve or make changes to the proposal with the possibility of a 180-day extension, according to the program’s rules on its website.
About 20 banks are involved in the process led by the State Bank of India, one of the people said. Lenders had the option to reject Suzlon’s proposal as unfeasible and liquidate the company, according to program rules.
The proposal doesn’t cover Suzlon’s bonds and international borrowings. Suzlon failed to pay $209 million, the biggest convertible-note default by an Indian company, on Oct. 11. Negotiations with bondholders continue, one of the people said.
To contact the reporters on this story: Natalie Obiko Pearson in Mumbai at firstname.lastname@example.org; Anto Antony in Mumbai at email@example.com
To contact the editor responsible for this story: Reed Landberg at firstname.lastname@example.org