Suzlon FCCB crisis Sitting in his new second floor office at One Earth, the impressive new campus

hes built for Rs. 430 crores on the outskirts of Pune, Tulsi Tanti sounds unusually composed and confident for a man whos emerged from a near-death experience in the past 36 months. Hes confident that by the end of 2011, Suzlon will become the most profitable wind energy company in the world. Suzlon was founded by Tulsi Tanti in 1995, when he was working in a family-owned textile company with 20 employees. In that year, India's shaky power grid and the rising cost of electricity offset any profits the company would make. After providing electricity for his own company, Tanti realized that other companies in India could also greatly benefit from being sold wind power technology and advised on its use. The ingenious businessman soon realized that the captive wind energy unit he had set up to run his units had better prospects than his existing business. He then set up a green energy company Suzlon Energy with the help of some of his friends of Rajkot. Later, Suzlon Energy grew manifold driven by its early-mover advantage in India and the incentive-driven capacity addition in key global markets. Suzlon adopted a business model wherein clients would be responsible for 25% of the up-front capital investment and Suzlon would arrange the remaining 75% on loan. Initially banks were hesitant to fund loans for this model but by 2008 40-50 Indian banks were financing wind power projects for Suzlon clients. Apparently, for him, its now no longer a question of survival. I am not concerned about this or the next quarter. Today, 70 percent of my focus is on building the organization for the long-term opportunity, he says. When Tulsi Tanti took the eighth spot in Forbes' 2005 list of 'Richest Indians', not many knew him. He had built India's largest wind turbine energy company in less than a decade and had ambitions to grow globally. His mercurial rise has been well-storied since then. By 2007, he had created a business that was valued at Rs. 57,000 crores in less than 13 years. His was a story of entrepreneurship and unbridled ambition as Suzlon became the fastest growing wind energy company in the world, selling wind turbines to nearly 25 countries, across the US, Europe, Latin America and Asia. Suzlon Energy Limited (SEL), the worlds fifth largest wind turbine generator (WTG) company, and the largest WTG manufacturer in India and Asia, on May 16, 2007 launched and priced a Foreign Currency Convertible Bonds (FCCBs) issuance for an amount of USD 300 million. The proceeds of the Bond will be utilized to fund Suzlons various Growth Initiatives. Ever since September 2008, when the financial crisis struck, Tanti had faced an uphill struggle to even stay afloat. He was grappling with a product recall crisis, an over-leveraged balance sheet, a messy acquisition of German wind energy major REpower Systems, a spate of senior level exits and, as credit markets froze, the market for wind turbines all but dried up.

The FCCBs, which have a maturity of 5 years and 1 day, are convertible at a conversion price of Rs 1,800 per share, (as adjusted from time to time) which is at a premium of 59.59% over the volume weighted average price (VWAP) of Rs 1,127.90 on the BSE on May 16, 2007. The FCCBs are zero coupon bonds with a yield to maturity of 7.60%, calculated on a semi-annual basis, at the end of 5 years and 1 day if not converted into shares during the period. The bond will have a Mandatory Conversion feature after 24 months. The FCCBs are expected to be listed on the Singapore Exchange Securities Trading Ltd. Deutsche Bank acted as the Sole Book runner to the transaction; and Yes Bank Ltd has acted as an advisor to the Company.

2006 -Suzlon Energy Ltd - Signed a turbine supply agreement with Edison Mission -Suzlon Energy Ltd - Signed with Edison Mission Group -Suzlon gets Rs 620 cr Australian firm project order 2007 - Suzlon Energy Limited has has appointed Mr. Andre Horbach as a global Chief Executive Officer of the Suzlon group. - Suzlon Energy has issued zero-coupon foreign currency convertible bonds worth 0 million to fund its organic growth initiatives. -Suzlon Energy Ltd signed a major new order with ONGC, India's leading Oil & Gas Exploration & Production (E&P) Company, for 51 MW of wing turbine capacity. -Suzlon Energy Ltd wins the Best PE/VC Backed Company Award from Venture Intelligence Apex 2008 - Suzlon Energy Ltd has appointed Mr. Sumant Sinha as Chief Operating Officer (COO) with effect from August 01, 2008. - The Company has splits its face value from Rs10/- to Rs2/-. -Suzlon Energy Ltd enters Kerala with its first Wind Power Project commission of S52-600 kW turbine at Agali -Suzlon by Deco -Suzlon turbine Energy Ltd is first S88-2.1 MW wind turbine is commissioned Light Ceramics Ltd, in Gujarat, India Energy Ltd Signs up with ONGC Limited - for 51 MW wind capacity

-Suzlon Energy Ltd signs up with Ayen Enerji Co. Inc. - for 31.5 MW of wind turbine capacity

-------------------------------Suzlon Energy Limited (SEL), the worlds fifth largest wind turbine generator (WTG) company, and the largest WTG manufacturer in India and Asia, on May 16, 2007 launched and priced a Foreign Currency Convertible Bonds (FCCBs) issuance for an amount of USD 300 million. The proceeds of the Bond will be utilized to fund Suzlons various Growth Initiatives. The FCCBs, which have a maturity of 5 years and 1 day, are convertible at a conversion price of Rs 1,800 per share, (as adjusted from time to time) which is at a premium of 59.59% over the volume weighted average price (VWAP) of Rs 1,127.90 on the BSE on May 16, 2007. The FCCBs are zero coupon bonds with a yield to maturity of 7.60%, calculated on a semi-annual basis, at the end of 5 years and 1 day if not converted into shares during the period. The bond will have a Mandatory Conversion feature after 24 months. The FCCBs are expected to be listed on the Singapore Exchange Securities Trading Ltd. Deutsche Bank acted as the Sole Book runner to the transaction; and Yes Bank Ltd has acted as an advisor to the Company.

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Wind-power company, Suzlon has restructured its foreign currency convertible bonds, sources told CNBC-TV18's Pankaj Poddar. The conversion price is between Rs 95 and Rs 100 per share. CNBC-TV18 learns that the covenants have been relaxed for the entire tenure. Suzlon will pay 1% fees to bondholders for the waiver. Sources said the new price is likely to result in a dilution of 9.5% for the company. India's largest wind turbine supplier has USD 211 million and USD 121 million bonds due in June and October 2012. Its earlier FCCB price conversion was at Rs 360 and Rs 370 per share. It is awaiting approval from the Reserve Bank of India for the FCCB restructuring. ---------------The Suzlon Group, the world's fifth-largest wind-turbine maker, on Monday said that the holders of the June tranche of FCCBs (foreign currency convertible bonds) have approved its proposal for an extension of maturity date until July 27. "Our bondholders have approved our request for upto a 45-day extension of maturity on our June tranche of FCCBs. The resolutions were approved today," Suzlon Group chief financial officer Kirti Vagadia said in a statement. "The company has also received permission from RBI for the extension of FCCBs," he said.

"We requested for extension to ensure that there is adequate time to obtain approvals and to close administrative documentation necessary to complete this refinancing exercise. The process is on track. Along with our plans to divest non-critical assets, we are confident of meeting our nearterm FCCB obligations," he said. Wind turbine maker Suzlon Energy on Friday said it is in advanced stages to raise up to USD 300 million from new facilities to meet its FCCB (foreign currency convertible bonds) obligations in June. It has also sought up to 45 days more time for repayment of the bonds. Suzlon's acquisition of Germany's REpower was funded by money raised via FCCBs. Now the first tranche of FCCB redemption is due next month. Suzlon has FCCB's with a total redemption value of about USD 569 million due in June and October. The major issue is that current stock price is at around 70% discount to the conversion price of FCCBs and there have been concerns over its ability to repay debt this year. The stock closed up 0.5% at Rs 20.10 on NSE. The company's CFO Kirti Vagadia tried to address some of these concerns on Friday. "I am very pleased to inform our stakeholders that we are at an advanced stage of raising up to USD 300 million with our senior secured lenders for the refinancing of our June FCCB obligations. In order to ensure there is adequate time for the necessary requisite approvals and administrative documentation, we have asked our bondholders for an extension of maturity of up to 45 days," he said. Suzlon also continues to work on plans to raise capital at its overseas subsidiary level, Vagadia added. Suzlon Energy has sought waiver of penalties that have accrued for breaching terms and conditions set by investors in its foreign currency convertible bonds. The penalties will amount to 10 per cent of FCCBs, or $30-50 million. The wind energy equipment supplier told the stock exchanges that it was also looking at removing covenants it was required to fulfil under the FCCB agreement and has called a meeting of bondholders on April 29. The company has proposed extraordinary resolutions in relation to the trust deeds and certain terms and conditions of the bonds, including the removal of financial covenants and waiver of any existing or prior breaches, Suzlon said. Financial Chronicle has learned that for the two sets of FCCBs worth $300 million and $200 million issued by the company, there were three main financial covenants. First, net borrowings to tangible net worth cannot be more than 1.5 times. Second, full-year Ebitda (earnings before interest, taxes, depreciation and amortisation) cannot be less than 1.33 times the debt service

coverage requirement, ie, repayment and service cost. Third, net borrowings to net Ebitda should not be more than four times. Profit of the company has been under pressure for the last three quarters and hence, it has not been able to meet the net borrowings to net Ebitda margin, a person familiar with the FCCB refinancing said. According to the official, this has invited penalty from bondholders. An analyst with a foreign bank said the company is not expecting increase in Ebitda in coming quarters. Ebitda will continue to fall for the coming quarters, the analyst said on the condition of anonymity. Suzlon had reported an Ebitda of Rs 408 crore in the nine months to December 31, down from Rs 1,996 crore a year earlier. Suzlon is also looking at resetting the conversion price of bonds. Financial Chronicle had first reported on March 11 about how the company would reset the conversion rate to Rs 80-85 a share. Suzlon will become the first company to reset the conversion price of FCCBs after the ministry of finance relaxed the guidelines for companies to price their bonds based on share prices of the past six months. Suzlons spokesperson said, We have communicated to the stock exchanges on the subject and we have nothing to add to the information in the public domain.

Suzlon Energy, the worlds fifth-largest wind turbine maker, will have to revise the terms of its $500-million foreign currency convertible bonds (FCCBs) maturing in October 2012, after a proposal to restructure them was rejected by investors. The Tulsi Tanti-controlled Suzlon is being forced to revise the terms on these bonds at a time of tight liquidity conditions and when it has to pay 175 million euros (nearly Rs 1,313 crore) this month to raise its stake in subsidiary REpower Systems. In a statement issued on Monday, Suzlon said it was evaluating options to change the terms of the convertible bonds. Holders of one tranche of the five-year bonds issued in June 2007 passed the amendment resolution at a meeting on April 29, while investors in bonds issued in October 2007 did not approve the proposal, Suzlon said. Suzlon issued the zero-coupon bonds, worth $300 million and $200 million respectively, to part finance the acquisition of REpower.

Suzlon had earlier agreed to buy 22.4% in REpower from Portugal-based energy firm Martifer for about 270 million euros. Suzlon and Martifer agreed on the payment to be made in three tranches. Although Suzlon paid 95 million euros, including 30 million euros on Monday, it has to pay 175 million euros by the month-end. Suzlon had funded the initial two installments from internal accruals, while its unclear on how the last payment would be made. Suzlon needs to raise its stake in REpower to about 91% that will enable it to get REpowers advanced wind turbine technology to India and other markets. The latest payment to Martifer has already raised Suzlons stake in REpower to 76%. Growth in developed markets, such as the US and Europe, is slowing for Suzlon, while demand in emerging markets is steadily growing. Although Suzlon had contracted the FCCBs — debt raised in foreign currency that can be used to fund acquisitions or capital expenditure — the recent slowdown had prompted Suzlon to restructure the bonds by offering new bonds for old and a cash payment or a combination. Suzlon set the conversion price for the new bonds at Rs 76.6755 per share, at an exchange rate of Rs 49.81 to the dollar. In its second restructuring option, Suzlon offered the bonds for cash, while a third option was to offer a percentage of the bond value as fee. Under the first option, Suzlon would convert the old bonds of $245 million into $147 million, at a conversion ratio of Rs 73, instead of Rs 360-372.

Suzlon looking to sell stake in Hansen