Suzlon to acquire 100% stake in Repower

Suzlon with the help of open market purchases has increased its stake in its subsidiary REpower from 90.48% to 95.16%. The increase in stake to 95.16% was in part funded by promoter loans. In the middle of  March, promoters have sold their 2.25% stake in Suzlon at around Rs 190 crore.

There is a rule under German law that if the majority shareholder has its shareholdings of 95% then it can initiate squeeze-out proceedings in respect of the balance 5%. Following this rule, Suzlon has served a notice to the board of RE power to conduct the process of buying out minority shareholders. It is estimated that legal process and regulatory approval will take 6-9 months period, according to Suzlon.

In order Suzlon wants to increase its stake to 100% it is estimated that it requires a fund of RS 700-775 crore.

However, it has been already announced that the balanced fund requirement could be met largely out of proceeds from the FCCB issuance. The issuance of FCCB has been approved by Suzlon’s board and is due to be traded in 2016 on the Singapore Exchange. Suzlon on December 10 has reported outstanding FCCBs of about R2, 140 crore with REpower having cash in hand of R1, 730 crore. The total redemption amount in FY13 is about R2, 570 crore and Repower cash in hand will be used to partially fund the potential FCCB redemption in FY13.