Mumbai: Brookfield Asset Management Inc. is planning an offer for a majority stake in India's debt-laden Suzlon Energy Ltd, according to people familiar with the matter.
The Toronto-based investment firm is working with a financial adviser for due diligence on Suzlon, the people said, asking not to be identified as the details are private. Brookfield proposes to start with buying new shares issued by the company, followed by purchasing stocks from the existing holders under an open offer, the people said.
As part of the proposed deal, the Canadian company is in discussions with Suzlon's creditors to restructure the outstanding bank loans of more than Rs 11,000 crore ($1.6 billion), under a so-called one-time settlement plan, the people said. Brookfield is demanding that the lenders led by State Bank of India take a haircut of as much as 50 per cent on the loans, they said.
Suzlon is in talks with several investors and Brookfield's proposal is among the various options available, one of the people said. A binding offer from Brookfield could come as soon as the end of this month, another person said.
Shares of Suzlon rose 3.3 per cent on Wednesday. The stock has fallen 36 per cent in the past year.
A deal like Brookfield's could be critical for Suzlon and its lenders as the firm's ratings on its long-term bank facilities were downgraded at Care Ratings Ltd. to D from BB in April. Suzlon has convertible bonds worth $172 million coming due on July 16, data compiled by Bloomberg shows.
Deliberations are ongoing, details of Brookfield's proposal might change and the investment firm can decide against an offer at the end, the people said. A representative for Brookfield declined to comment. Representatives for Suzlon and SBI didn't immediately respond to requests seeking comments.