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Alstom offers to buy REpower for €1.5 bn

Thursday, 15 March 2012 - 10:22am IST | Place: Mumbai | Agency: DNA
Alstom, the French power giant, has offered to buy REpower, a Suzlon company and has entered into exclusive talks, sources said.

Alstom, the French power giant, has offered to buy REpower, a Suzlon company and has entered into exclusive talks, sources said.

The FT Deutschland newspaper said Alstom has begun talks with Suzlon, which may be willing to sell the unit for €1.5 billion ($2 billion or Rs10,000 crore), and has been granted exclusive access to performance data on the unit.

Tulsi Tanti had acquired REpower in May 2007 after fighting a 5-month acquisition battle with Areva, another French power major.

The acquisition made Suzlon one of the biggest wind turbine players in the world.

It acquired a 75% stake in REpower for €1.35 billion.
Over the next four years Suzlon increased this stake to 100%.
But the acquisition turned into a debt millstone, forcing the company to take desperate measures every time a debt service deadline arrived.

Suzlon’s consolidated debt stood at Rs11,790 crore on December 31 last. It also had cash balances of Rs1,915 crore.

“Suzlon has gone through one round of restructuring and has also sold a major stake in Hansen Technologies to service its debt over the years. Now, it might be looking at REpower as two more debt service deadlines are arriving,” said an analyst with an international brokerage.

Suzlon is currently staring at two debt service deadlines — on June 5, it will have to cough up Rs1,800 crore and on October 4, another Rs1,000 crore.

A Suzlon spokesperson called the FT Deutschland report total speculation, but experts said the debt date could change that view.
However, analysts caution handing over the reins of its golden goose may not be a swell deal.

REpower also affords Suzlon a strong presence in the global offshore market, apart from access to technology.

“Suzlon started indigenising REpower technology only from October last, and unless it enters into a pact with Alstom to retain the technology, the sale could be a big negative for Suzlon,” said the analyst. He did not foresee a deal happening anytime soon.




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