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Suzlon committee of creditors starts voting on promoters’ restructuring plan

The current proposal by promoters of Suzlon offers a 60% haircut to lenders in which the total debt will be split in sustainable and unsustainable portion.

By Ankur Mishra

The committee of creditors (CoC) of beleaguered wind energy producer Suzlon Energy have started voting on the debt restructuring plan presented by promoters of the company, sources close to development told FE. The process will conclude by March 26. "Out of 19 lenders, 16 have voted on resolution plan" the source added. The e-voting for Suzlon was supposed to be completed on March 21, but due to the existing scenario over Covid-19, it has been extended till March 26, a source further added. As per the Insolvency and Bankruptcy Code (IBC), a 66% vote is required for the CoC to approve a resolution plan.

The current proposal by promoters of Suzlon offers a 60% haircut to lenders in which the total debt will be split in sustainable and unsustainable portion. Suzlon owes Rs 12,785 crore to financial creditors; State Bank of India (SBI) is the lead lender. The other lenders include Axis Bank, Bank of Baroda, ICICI Bank, IDBI Bank and Yes Bank. The company sought to convert Rs 7,700 crore in debt into convertible debentures, which would be held in the investment books of banks. Debt worth about Rs 3,600 crore was seen as sustainable and would remain in the form of loans. The remaining portion of debt would continue in form of non-fund exposure for banks. The debt restructuring plan also included equity infusion of up to Rs 400 crore by promoters and associates by way of issuance of equity shares or compulsory convertible debentures (CCD).

Suzlon's board had earlier approved debt restructuring plan on February 27. The company informed exchanges that under the approved debt restructuring plan, it would issue securities, shares, convertible bonds and warrants to lenders for converting of part of debt into equity. The Pune-based company will also divest and dispose some of investment, assets and also dilute stake in some of the undertakings in line with the approved plan. However, the company did not specify assets it would sell to reduce its stake in some companies.

The board also approved a proposal to appoint Sameer Shah as an independent director of the company for a five-year term commencing February 27. His appointment is subject to regularisation by the shareholders at the next Annual General Meeting of the company. The directors also gave a nod for amending the articles of association and increase in the authorised share capital and alteration of the capital clause of the memorandum, it added.

FE reported earlier that lenders to Suzlon extended the inter-creditor agreement (ICA) till April 30, 2020, to give themselves more time to come up with a resolution. The consortium of lenders entered into an ICA on July 7, 2019, and the standstill period of 210 days expired on January 7, 2020.

Suzlon Energy on February 12 reported widening of consolidated net loss to Rs 743 crore in the December quarter compared to net loss of Rs 40 crore in the same period a year-ago. The company also disclosed to exchanges that its status as a 'going concern' depended on the favorable outcome of the restructuring plan. As per exchange filing on January 7, Suzlon Energy had earlier defaulted on the payment of Rs 7,256 crore to lenders. FE learned that the lenders had earlier discussed resolution with two investors, reportedly Canada-based Brookfield and Denmark-based Vestas Wind Systems. Subsequently, the lenders considered the proposal by the existing promoters led by Tulsi Tanti.