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Suzlon Energy close to sell German subsidiary Senvion for 1 billion euro

Suzlon is in the process of implementing a Rs 9,500 cr corporate debt restructuring, which was approved by a consortium of 19 banks in January 2013.

Updated: Jan 20, 2015, 11.47 AM IST
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'Suzlon in talks with Centerbridge Partners for sale of Senvion'
MUMBAI: Debt-ridden wind turbine maker Suzlon is in advanced talks to sell its wholly owned German subsidiary Senvion SE to US-based private equity fund Centerbridge Partners for about €1 billion (Rs 7,150 crore), sources privy to the development said.

The likely valuation is at a 40% discount to Suzlon’s 2007 acquisition of Senvion, formerly called REpower, in 2007. Suzlon has a debt of over Rs 16,000 crore and is looking to retire as much as Rs 4,000 crore of debt by March 2015, Chairman Tulsi Tanti had told reporters on the sidelines of the Vibrant Gujarat Summit.

The company said it had not finalised any deal so far. “We wish to submit that the board of the company has not approved any such transaction and the company continues to actively explore number of options for its liability management,” it said in a statement to the stock exchange.

Its shares jumped 8.5% on BSE on Monday.

Analysts say retiring part of the large debt would be a big boost for the company. It continues to make losses due to the huge interest overhang although it has reported positive EBITDA for the past three consecutive quarters.

The company has gained from the government’s decision to restore a major tax concession, called accelerated depreciation, for wind energy which was earlier withdrawn by the UPA regime.

Suzlon said last week that it planned to develop 3,000 mw of clean energy projects in Gujarat in the next 5 years.

The company met lenders on Monday to discuss contours of the deal. The lenders are understood to have backed the deal, the sources cited above told ET Now. Suzlon is in the process of implementing a Rs 9,500-crore corporate debt restructuring plan, which was approved by a consortium of 19 banks in January 2013.

Experts say Suzlon will want to sell Senvion SE and focus on its India operations in the wake of the Modi government’s thrust on renewable energy. Power, Coal and Renewable Energy Minister Piyush Goyal wants renewable energy projects to grow exponentially.

Ministry officials say that companies setting up large power projects would also be required to build renewable energy plants. Already, distribution companies are required to purchase part of the electricity from such sources although most utilities fail to adhere to this requirement.
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