Suzlon FCCB Default - A Blessing in Disguise

This is a good development for business. Now the company will be able to focus its resources in creating value in the business instead of paying it to unsecured lenders.

This is a good development for business. Now the company will be able to focus its resources in creating value in the business instead of paying it to unsecured lenders.

Even when Suzlon paid the first FCCB in July without any holdbacks there was concern that maybe it would've been better to instead put that money back into the business which would've created better value. Though the company showed great commitment in paying the bond holders.

It is actually good news for Suzlon vendors, employees and customers. Everyone knows that there is great value in the Suzlon business. They also have a great order book. But the business was suffering because of the debt payouts. This will allow the company to put money in the business and honors commitments to employee's vendors and customers.

Suzlon primary lenders and banks are completely aligned with the company and totally support their strategy of Funding business at this time that is the best news.

This will result in a stronger business and company in the long run.

As long as the company can create value in the business capital structures will work out.

The company was right to not pay now and ask for an extension. The bond holders have acted Irresponsibly.

Why did the bond holder do this?

All the commercial benefits of the extension are now lost to the bond holders.
These devalued bonds can be easily traded making it a very big loss making move for the bind holders.
The company actually doesn't suffer since these are unsecured lenders and the only way forward is litigation and negotiation. They have no choice and business will not be impacted at all.