Suzlon's Senvion prepares EUR-500m bond sale - report

Aug 20, 2014 - German wind turbine maker Senvion SE plans to sell some EUR 500 million (USD 665m) in bonds so it could finance the acquisition of its parent Suzlon Energy Ltd's (BOM:532667) turbine service contracts.

Tulsi Tanti, the chairman of the Indian group, said so in an interview with Bloomberg published today, adding that the move is aimed at making Senvion more attractive ahead of a planned initial public offering (IPO) in London by March 2015.

The plan is for Senvion to use the proceeds from the offering to buy Suzlon’s contracts for the monitoring and maintenance of 25,000 MW of wind turbines globally. At the same time, Suzlon will use the funds from the sale of these contracts to repay high-cost loans in India.

The particular maintenance business generates approximately EUR 500 million in revenue a year and is expanding at around 20%. Following the purchase, Senvion will be able to cover the fixed costs of its turbine production operations with the “annuity-like” cash flows from servicing, the chairman has said. The acquisition will extend Senvion’s geographic reach to countries such as India, Australia and the US.

German lender Deutsche Bank AG (ETR:DBK) and the Royal Bank of Canada (TSE:RY) are managing the planned bond sale.

As per the proposed IPO, Senvion would seek to raise some EUR 500 million by selling a 25% interest on the London Stock Exchange, Tanti was cited as saying.

(EUR 1.0 = USD 1.331)

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