Suzlon Energy looks to lower debt, after REpower purchase

India’s wind power giant Suzlon Energy (NSE:SUZLON) is looking to sell assets and shares in an effort to lower its debt, which quadrupled to $2.45 billion in the fiscal year ending in March, according to Reuters. Suzlon’s board approved raising Rs 50 billion ($1 billion) today through issuing equity, debt or other methods.

The company’s debt grew from borrowing funds to control 90.72 percent of Germany’s REpower Systems (ETR:RPW) (see Suzlon finalizes REpower purchase). Suzlon paid €87.6 million to bump its stake to 83.43 percent, and then another €87.6 million on June 5 to reach 90.72 percent.

The company said it funded the acquisition by renegotiating financial covenants and bank loan facilities to adjust the required debt-to-equity balance.

Suzlon’s Chief Operating Officer Sumant Sinha said the debt reduction plan would depend on market conditions and there was no target, according to Reuters. The company said it could look at a share sale if stock market conditions prove to be promising.

Suzlon acquired a 66-percent stake in Hamburg-based REpower almost three years ago for Rs 7,314 crore ($1.55 billion). Suzlon announced plans in September 2008 to buy Martifer’s (LIS:MAR) 22.48-percent stake by Dec. 15 of that year (see Windy dealmaking leads the week).

But that plan was de-railed as market concerns caused Suzlon to cancel a €270 million ($360 million) rights issue to fund the acquisition. Then in November, Suzlon said negotiations were back on as the company planned to sell shares to finance an expansion that included the acquisition (see Report: Suzlon resumes bid for REpower shares).

In May, Suzlon’s founders raised $47 million through the sale of 2 percent of their shares (see Wind giant Suzlon sells off 2 percent stake).

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