October 12, 2008

Suzlon raises USD 552 million through QIP to repay debt

Suzlon Energy has raised USD 552 million through a qualified institutional placement to repay a part of the debt raised to fund the acquisition of Germany’s REpower Systems. About 43 investors from around the world have subscribed to the QIP.

Suzlon’s board approved the sale of 11.4 million shares for INR 1,917 a share. Post placement, the promoter’s stake in Suzlon Energy will be 65.91%.

Mr Tulsi Tanti chairman of Suzlon Energy said that “We funded 2 large acquisitions by raising debt and that was a concern for our investors. Our balance sheet is more comfortable now.’’ He added that the share sale would bring down Suzlon’s debt to INR 5,275 crore.

Mr Tanti said that roughly half the funds would be used to repay the debt it incurred to fund acquisitions of REpower and Hansen Transmissions. Suzlon might also use part of the fund to buy REpower shares from Areva and Martifer SGPS.

It is noted that Suzlon’s EUR 1.2 billion acquisition of REpower and EUR 465 million purchase of Belgian gearbox maker Hansen Transmissions International in 2006 have increased debt to 0.75% of equity, straining Suzlon’s balance sheet.