Suzlon Sells Senvion for 1 Billion Euro, Shares Fall

Shares in wind turbine manufacturer Suzlon first rose over 8 per cent and then fell sharply on Thursday. The surge in shares - in early trade - was on account of Suzlon's announcement that it has entered into a binding agreement with US-based private equity firm Centerbridge Partners to sell its German unit Senvion SE for 1 billion euro.

The proceeds from the sale will be used to repair Suzlon's balance sheet and focus on higher growth markets like India and the United States, the company's chairman Tulsi Tanti said.

Suzlon's sales have been under pressure in the last few years from a slowdown in global turbine sales and a debt pile. Suzlon was forced to restructure $1.8 billion of debt after defaulting on a $200 million convertible bond redemption in 2012.

Suzlon had acquired Senvion SE (formerly known as RE Power) in 2007 for 1.5 billion euro. The costly acquisition led to huge debt on Suzlon's balance sheet. The company had debt of approximately Rs 15,000 crore on its book as of December 31, 2014.

Thursday's deal to sell Senvion is at a discount and Suzlon may have to write off huge losses, which will put further pressure on its earnings, analysts say.

Analysts also citied profit taking as the reasons for the selloff in Suzlon shares. Suzlon shares had witnessed big gains over the last few sessions in anticipation of the deal.

Market analyst Sharmila Joshi told NDTV that Suzlon's focus on renewable energy will not help in revival of its business given the fact that crude oil prices have fallen so much.

Shares in Suzlon Energy ended 6.7 per cent lower at Rs 16.05 apiece, underperforming the broader Nifty, which closed 0.37 per cent higher.