Suzlon to Sell German Unit for $1.16 Billion

Suzlon to Sell German Unit for $1.16 Billion

New Delhi/Mumbai: Wind turbine maker Suzlon Energy Ltd said it had agreed to sell its German unit Senvion SE to buyout firm Centerbridge Partners for 1 billion euros ($1.16 billion or over Rs 7,100 crore), in an all-cash deal that will help the group reduce its debts.

The companies have signed a binding agreement, which also has a future earn out clause of an additional 50 million euros, they said in a statement on Thursday.

Loss-making Suzlon has been under pressure over the last few years due to a slowdown in global turbine sales and a debt pile that has grown to Rs 16,500 crore ($2.68 billion). It was forced to restructure $1.8 billion of debt after defaulting on a $200 million convertible bond redemption in 2012.

The company will use proceeds from the Senvion sale to cut its debts by Rs 6,000 crore, Suzlon chairman Tulsi Tanti told a news channel, and to focus on higher growth markets like India and the United States.

Shares in Suzlon opened up more than 4 per cent on Thursday before ending down nearly 7 per cent against a 0.4 per cent rise in the benchmark BSE Sensex.

"The driver of Suzlon's valuation was this company. What will remain, if you sell that?" said Daljeet S Kohli, head of research at brokerage IndiaNivesh. "It's like saying you sell your house to retire the home loan and say I am richer. The fact is that you are on the roads."

On Monday, Suzlon said it had not approved the sale of Senvion while on January 7 the company had denied it was in talks with potential buyers, calling a media report "baseless and false".

Senvion, previously known as REpower Systems SE, was bought by Suzlon in a series of tranches totalling $1.4 billion that gave the Indian company full control in 2011.

Together with Senvion, Suzlon was the world's fifth largest wind turbine manufacturer. Suzlon's Tanti said ex-Senvion the company has an order book of 1,500 megawatts.

Centerbridge declined to comment on the deal but a source familiar with the transaction said roughly 550 euros would be put up by the private equity firm as equity.

($1 = 0.8617 euros; $1 = 61.6700 rupees)

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