A consortium of 16 banks led by the State Bank of India (SBI) has sold Suzlon Energy Limited’s loans worth Rs 80 billion to the REC Limited (REC) and Indian Renewable Energy Development Agency (IREDA).
The sale of Suzlon Energy’s loans worth Rs 80 billion from the balance sheets of these banks will help them clean their books given that it was unresolved for nearly a decade and a half. The loan sale was concluded even as Suzlon Energy was in midst of its second bank-led restructuring initiated in 2020. The REC and IREDA-led refinancing will extend the tenure of Suzlon’s loans and also bear a lower interest rate than what it was paying banks earlier. According to the restructuring plan, the company had time till 2028 to pay off its dues at an average interest rate of 11 per cent. Now, the new refinancing scheme envisages repayment tenure till 2030 and an initial interest rate of 9.5 per cent . The specialised power sector knowledge of IREDA and REC will enable Suzlon to address the core issues more effectively and allow operational flexibility for running the business. As per the agreement, banks will continue to hold an equity stake in the company with the conversion of optionally convertible debentures and compulsorily convertible preference shares.