Suzlon promoters sell stake at a discount to help firm

In a desperate bid to ease some of the financial burden of wind turbine maker Suzlon Energy, its promoters on Monday sold around four crore shares, amounting to 2.25% equity, in the company.

Vinod Ranchhodbhai HUF and Sanman Holdings Pvt Ltd, two promoter entities, sold two crore shares each, Suzlon Energy said in a notice to the stock exchanges after market hours.

Incidentally, Sanman had in July acquired 18.85 lakh shares in a rights issue at `63 per share. Suzlon mopped up `1,308 crore through the issue.

The stock closed the day down 2.31%. A spokesperson for the company said the transactions were “at a discount to market price.”

At the day’s closing price of Rs46.45, the sale would have fetched the two promoter firms Rs185.80 crore.

Following the sale, promoter holding in the company stands at 54.84%.

As on December 31, Vinod Ranchhodbhai HUF held 3.54% stake, or 6.3 crore shares, in Suzlon, of which 50 lakh shares were pledged.

Sanman, on the other hand, held 10.84% stake, or 19.27 crore shares, of which 94.75 lakh shares were pledged.

As on that date, about 60% of the promoters’ stake was pledged.
That was 34.35% of Suzlon’s total paid-up capital.

The Suzlon spokesperson said the pledged shares were not part of those sold.

The spokesperson said the “money (raised from the share sale) is being lent to the company” to fund its “strategic initiatives”.

In its statement, Suzlon said the two entities have indicated that the “primary intention of the utilisation of these proceeds is to extend financial support to the company by suitable mode, subject to applicable law, the company approving the same and receipt of all requisite approvals.”

The spokesperson said the money will not be used to cover operational expenses or to pay interest on the company’s debt, which at the end of the quarter ended December 31 was Rs12,078 crore.

The company has a moratorium on principal repayment of its loans till March 2012 and in the third quarter paid Rs295 crore as interest.

An analyst with a domestic brokerage said the share sale could be to manage interest payment. “But, piecemeal measures like this won’t work. They (Suzlon) have to do something drastic since they have to start repaying the principal next year,” he added, requesting anonymity.

On January 4, the market was rife with speculation that the Tulsi Tanti family, promoters of Suzlon, were in discussion with Gamesa to sell their stake. Suzlon called the reports “speculative in nature and inaccurate.” Even Gamesa recently denied the reports.