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ICRA finds Suzlon’s long term rating outlook negative. The rating agency is concerned about “increasing liquidity pressures on the company (Suzlon) and the high working capital intensity in the business.”
ICRA last week downgraded Suzlon’s long term and short term credit facilities to “double B” and “A4” respectively – one notch below the previous ratings. While doing so, the agency took note of the “continuing delays in recovery of some large debts and higher debt level amidst challenging operating environment.
Suzlon recently said that it was at an advanced stage of negotiations for raising up to US$ 300 million for paying the company’s dues to the holders of the ‘foreign currency convertible bonds. The bonds were issued in 2008 and a payment falls due in June.
The company had said that it had requested the bond holders to extend the payment date by 45 days, so that it has adequate time in raising funds to pay them.
ICRA took note of this in its rating of Suzlon’s credit facilities saying that there were “significant refinancing risks associate with funding arrangements for FCCB redemption liabilities of $ 360 million”.
Suzlon’s “ability to conclude the same (fund raising) in a timely manner remains a key rating sensitivity,” it said. While acknowledging that Suzlon’s order book position is good – the company has Rs 41,500 crore of orders on hand – ICRA noted that “uncertainty associated with respect to recovery” of dues from “sticky debtors”.
Reacting to ICRA’s statement, a spokesman of Suzlon told Business Line: "We are disappointed that ICRA, whom we have briefed on our near-term FCCB payment plans in some detail in recent days, has decided to ignore our actual situation and publish this announcement. Our senior secured lenders are extremely confident about the company's performance as evidence by our recently increased facilities, the roadmap we published to manage our FCCB commitments, and our 2011-12 business performance. We are confident that our key stakeholders will draw their own conclusions about our situation."
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