Indian wind turbine maker Suzlon Energy is working with international banks to raise between $300 million and $500 million in overseas bonds to repay debts due this year, its group chief financial officer said.
The world’s fifth-largest wind manufacturer by cumulative installed capacity, Suzlon needs to repay foreign currency convertible bonds of $360 million in June and $207 million in October.
However, one analyst cast doubt on the bond plan’s chances of success.
“The fundraising looks really difficult,” said Deep Mukherjee, director at Fitch Ratings in Mumbai.
“Investor appetite for high-yield bonds from emerging markets is dwindling and business prospects in the short term for the renewable energy sector look not so rosy, as they depend largely on spending by European governments, which are under stress.”
Suzlon finance chief Kirti Vagadia told Reuters by telephone on Friday that high-yield bonds would be raised in time to repay the debt, without giving a timeline or naming the banks the company was working with.
The company — which owns Germany-based REpower — will leverage cash flows and assets from its international business to raise fresh debt, said Vagadia, who is CFO at the company and group level.
The bonds would probably need to pay a coupon in the low to mid double-digit range t o attract investors, according to two debt capital market bankers who declined to be identified.
Luxury car maker Jaguar Land Rover, owned by India’s Tata Motors, paid an 8.125 percent coupon in a 500 million pound ($809 million) bond issue last month.
Suzlon’s foreign currency bonds maturing this year have conversion prices of 76.68 rupees and 97.26 rupees per share. This is far above the current price, making them unattractive for bondholders to convert into shares.
The shares, valued at $755 million, have lost nearly 60 percent in a year, partly on concerns about Suzlon’s ability to repay debt, and ended Friday 4.26 percent lower at 21.35 rupees.
Once the darlings of investors, shares in Suzlon and many other renewable energy companies have struggled since the global financial crisis of 2008. Suzlon’s shares are 95 percent below their record high in November 2007.
Shale gas discoveries in the United States, a pullback in green subsidies in Europe and massive capacity build-up in China have taken the sheen off renewable energy stocks.
Suzlon had 19.15 billion rupees of cash and consolidated net debt of 117.9 billion rupees at the start of 2012. Its net debt to equity ratio was 2.1 and it had receivables of 73.23 billion rupees.
Suzlon does not plan to sell or list REpower to raise funds to repay debt, nor is Suzlon founder Tulsi Tanti looking at selling a stake or issuing new shares, Vagadia said.
“REpower is not for sale,” Vagadia said, calling media reports on talks with potential buyers “speculative”.
