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Suzlon Energy Ltd Overweight
SUZL.BO, SUEL IN
Move toward making REpower a wholly-owned
subsidiary
Move toward acquiring 100% of Repower: Suzlon has increased its
stake in subsidiary REpower from 90.48% to 95.16%, through open
market purchases. Under German laws, a shareholding of 95% enables
the majority shareholder to initiate squeeze-out proceedings in respect of
the balance 5%. Suzlon has provided a notice to the REpower board to
conduct the process of buying out minority shareholders. According to
Suzlon, the regulatory approvals and legal processes may be completed
not earlier than 6-9 months.
• Funding the buyout: We estimate total debt funding requirement of
~Rs7-7.75bn to fund the increase in stake to 100% from 90.48%. The
increase to 95.16% has been funded partly through promoter loans to
Suzlon. Promoters had sold ~2.25% stake in Suzlon around ~mid-
March. The sales proceeds are estimated at ~Rs1.9b. According to
management, the balance fund requirement could be met largely out of
proceeds from the FCCB issuance announced today.
• Announcement on FCCB issue: The Suzlon board has approved the
issuance of FCCB due 2016, to be traded on the Singapore Exchange.
The issue will open today. As of Dec-10, Suzlon had outstanding FCCBs
of ~Rs21.4bn, ~18% of consolidated debt of Rs121bn (See Table 1 for
details). Assuming FCCBs due in FY13 are not converted, the total
redemption amount is ~Rs25.7bn.
• Post buyout, Suzlon will have access to REpower balance sheet:
REpower had cash of €275mn (Rs17.3bn) at the end of Dec-10. It will
also be able to consolidate balance ~9% of REpower PAT, which
translates into ~Rs323mn for FY12E. REpower cash can be used to
partially fund the potential FCCB redemption in FY13.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Suzlon Energy Ltd Overweight
SUZL.BO, SUEL IN
Move toward making REpower a wholly-owned
subsidiary
Move toward acquiring 100% of Repower: Suzlon has increased its
stake in subsidiary REpower from 90.48% to 95.16%, through open
market purchases. Under German laws, a shareholding of 95% enables
the majority shareholder to initiate squeeze-out proceedings in respect of
the balance 5%. Suzlon has provided a notice to the REpower board to
conduct the process of buying out minority shareholders. According to
Suzlon, the regulatory approvals and legal processes may be completed
not earlier than 6-9 months.
• Funding the buyout: We estimate total debt funding requirement of
~Rs7-7.75bn to fund the increase in stake to 100% from 90.48%. The
increase to 95.16% has been funded partly through promoter loans to
Suzlon. Promoters had sold ~2.25% stake in Suzlon around ~mid-
March. The sales proceeds are estimated at ~Rs1.9b. According to
management, the balance fund requirement could be met largely out of
proceeds from the FCCB issuance announced today.
• Announcement on FCCB issue: The Suzlon board has approved the
issuance of FCCB due 2016, to be traded on the Singapore Exchange.
The issue will open today. As of Dec-10, Suzlon had outstanding FCCBs
of ~Rs21.4bn, ~18% of consolidated debt of Rs121bn (See Table 1 for
details). Assuming FCCBs due in FY13 are not converted, the total
redemption amount is ~Rs25.7bn.
• Post buyout, Suzlon will have access to REpower balance sheet:
REpower had cash of €275mn (Rs17.3bn) at the end of Dec-10. It will
also be able to consolidate balance ~9% of REpower PAT, which
translates into ~Rs323mn for FY12E. REpower cash can be used to
partially fund the potential FCCB redemption in FY13.
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