Dhir & Dhir advises new lenders in Suzlon’s USD513.5m loan


The Rural Electrification Corporation (REC) and the Indian Renewable Energy Development Agency (IREDA) became the new lenders in the refinancing of wind turbine maker Suzlon Energy’s INR40.53 billion (USD513.5 million) loan.

Dhir & Dhir Associates acted as the sole advisers to REC and IREDA, which replaced a consortium of 16 lenders led by the State Bank of India.

The Dhir team comprised partner Purusharth Singh, senior associate Humera Niyazi, and associates Nikhil Gupta, Anurag Mawai and Raman Choudhry.

“Handling the Suzlon refinancing transaction has been rather enriching for us. While we work on a multitude of banking and finance transactions, it is not every day that we see a deal like this in terms of size, and an entity as massive as Suzlon, encumbered by sectoral distress,” Singh told India Business Law Journal.

“We have had the privilege of advising the new lenders [REC and IREDA], who have replaced the consortium led by the State Bank of India, to navigate the challenges posed by this deal.”

Suzlon Energy was guided by its general counsel Anoop Khatry, along with the in-house team members.

Cyril Amarchand & Mangaldas were also engaged to act as Suzlon’s counsel, led by partner Amey Pathak, while the previous consortium of 16 lenders had Khaitan & Co as advisers.

The core Khaitan team comprised senior partner Haigreve Khaitan, partner Kumar Saurabh Singh, principal associate Riya Agicha and associate Prashamsha Tulachan. Partners Aditya George Cheriyan and Oishik Bagchi assisted on the capital markets aspects of the deal.

Given the sensitive and critical nature of the transaction, numerous complex issues surfaced, which were resolved to the satisfaction of all parties after much deliberation.

“Refinancing, or take-out financing as it is, is not a new practice, yet, the transaction structure brought certain challenges,” said Singh of Dhir & Dhir.

“Even though it was a refinancing deal, and the borrowers did not own any projects as such, we observed dominant elements of a conventional project finance transaction, which eventually had to be dealt with by sheer tact.

“For the transaction to be concluded, it was vital for the existing lenders and new lenders to be aligned in terms of the arrangement with reference to disbursement, the release of the security and the exit terms.”

According to the restructuring plan initiated in 2020, the wind energy turbine maker had until 2028 to pay off its dues at an average interest rate of 11 percent. However, with the refinancing deal, this timeline has been extended to 2030, while the interest rate has been reset at 9.5 percent.