Suzlon continues to fall

There was news yesterday in the Economic Times that Suzlon Energy had a looming default stress and the stock exchanges had sought clarification during market hours as the stock fell 6%.

The company issued a statement which had sent to the Singapore Exchange Securities Trading Limited ("SGX") but after market hours.

In the statement the company confirmed the default. It said, “The company has not made the payment of the principal amount of the outstanding Bonds, being US$ 172,000,000, which was due on 16 July 2019 in accordance with the terms and conditions of the Bonds. The Company is working on holistic solution for its debt and continues to be in discussions with various stakeholders in relation to its outstanding debt (including the Bonds).”

This default of $ 172 million is the last tranche of the $547 million bond issue, which was restructured in 2014, under which, it had converted $375 millon into equity by 2018.

This now puts additional preussure on the already tight liquidity situation. There are rumours of the company planning to sell a majority stake in Canadian asset manager Brookfield Asset Management Inc.

The news is that Brookfield is currently doing a due diligence and it proposes to start buying new shares issued by the company, to be followed up with a purchase of stocks from the existing shareholders through an open offer. There is no official word on this from the company.

The stock has nosedived today too. It opened at Rs.4.39 over yesterday’s close of Rs.4.67, going down to an intraday low at Rs.4.26.