Suzlon forced to scrap rights issue; Wind-turbine maker sought $390 Million to help complete REpower takeover
India’s Suzlon Energy Ltd., one of the world’s largest wind-turbine producers, hit fresh turbulence Monday, saying it had been forced to scrap a $390 million share-rights issue because of the stock-market slide.
Suzlon needs the funds that the rights issue would have raised to complete a takeover of Germany’s REpower Systems AG. That move is considered key to assuaging investor fears about Suzlon’s technological capabilities following a number of turbine-blade failures at U.S. installations.
Hamburg-based REpower, a global leader in wind power, also said Monday that it has been asked by its creditors not to sign an agreement allowing Suzlon to transfer technology and profits out of the company. Suzlon already owns a 66% stake in REpower.
REpower has been negotiating with a syndicate of global lenders to raise itsbankguaranteesandcredit facilities, a spokesman said. The banks, which he declined to name, made it a condition that Suzlon not be allowed to transfer profits from REpower. Talks on a full takeover of REpower by Suzlon have been suspended.
Suzlon’s stock fell 39% on Friday after a report that a 140-footblade broke off a wind turbine in Illinois and landed in a cornfield, the latest in a string of technology problems. The decline also reflected investor concerns that Suzlon would have to sell assets such as Belgian gearbox maker Hansen Transmissions International NV to complete its takeover of REpower. Suzlon’s stock closed down 0.6% on Monday at 46.95 rupees (94 U.S. cents).
In a letter to the Bombay Stock Exchange, Suzlon of Pune, India, blamed its stock slide on “malicious rumors spread with malafide intentions by [a] selective group of people.”
Suzlon said founder Tulsi Tanti and his family still hold 65.8% of its shares, unchanged since January 2008. It added that Suzlon remains current on all repayments. The “company continues to receive support from its lenders,” the statement said.
By Tom Wright
28 October 2008
Tags: Wind power, Wind energy
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