Suzlon completes sale of German subsidiary Senvion, nets Rs 7,000 cr

Suzlon has concluded the sale of its German subsidiary Senvion to US private equity firm Centrebridge for 1 billion euros (about Rs 7,000 crore), wind turbine maker announced today.

The company will use the proceeds to retire its debt and expand business. Additionally it will also earn 50 million euros (about Rs 350 crore) based on meeting certain performance criteria.

On January 22 Suzlon had signed a binding agreement with Centrebridge to sell Senvion which contributed about 65% to its consolidated revenue.

The Senvion sale was followed by Rs 1,800 crore investment by Sun Pharma chairman Dilip Shanghvi and his family members for 23% stake in Suzlon. The new investors will also Suzlon to get fund-based and non-fund working capital needed for projection execution.

"We have taken some transformational steps in the recent past aligned to our strategic vision. By this step we have demonstrated our strong commitment to our lenders who have been hugely supportive to us. The successful completion of the transaction of Senvion sale, paves the way for the group to ramp up volumes rapidly. We are now in a strong liquidity position to tap the opportunity available in India, other emerging markets and USA," Suzlon group chairperson Tulsi Tanti said in a statement.

Suzlon Group's sale of Senvion is aligned with the group's strategy to reduce the debt and focus on the home market and high growth market like USA and emerging markets like China, Brazil, South Africa, Turkey and Mexico, the company said.

Suzlon has a total debt of Rs 16,500 crore. We are raising about Rs 7,200 crore through sale of Senvion. About Rs 6,000 crore will be used to repay loans and Rs 1,200 crore will go to fund operations. We have issued foreign currency convertible bonds valued at Rs 3,000 crore and we hope this will be converted into equity next year.

At the time of signing the agreement in January Suzlon had a total debt of Rs 16,500 crore. The sale has helped Suzlon to raise Rs 7,000 crore in cash and will use about Rs 6,000 crore to repay debt and balance amount to fund operations.

In January Tanti had said Suzlon will be making profit in the next financial year. "Our interest cost will reduce, sales volume will go up. Our break-even level has come down and we expect the cost structure to improve further," he had said.