Sterling & Wilson Solar Stock Slumps As Promoters Seek Revised Debt Repayment Terms
A solar unit sits outside a house. (Photographer: Yael Martinez/Bloomberg)

Sterling & Wilson Solar Stock Slumps As Promoters Seek Revised Debt Repayment Terms

Shares of Sterling & Wilson Solar Ltd. slumped 20 percent after the solar engineering, procurement and construction firm's promoters sought more time to repay debt due to the company.

Promoters Shapoorji Pallonji and Company Pvt. Ltd. and Khurshed Daruvala were scheduled to pay Rs 2,563 crore to Sterling & Wilson Solar by Nov. 18, of which, Rs 2,335 crore was the principal and remaining was interest.

The promoters wrote to Sterling & Wilson Solar's board on Nov. 14, seeking a revised repayment schedule, according to its exchange filing. They also sought to reduce the balance outstanding amount to Rs 2,341 crore (Rs 2,085 crore principal and Rs 256 crore interest), citing "significant and rapid deterioration in the credit markets", which created a significant liquidity crisis, coupled with the lesser than expected realisation from its initial public offering, according to the filing.

The promoters, in their letter to the board, added that they will endeavour to reduce the outstanding loan by Rs 1,000 crore from the level as of the date of listing, by Dec. 31. The board in turn authorised the audit committee to work with the promoters to draw up a repayment plan by the end of the year, according to the filing.

The board also decided to charge an additional 50 basis points interest on the loans to promoters, taking the total interest to 100 basis points above the weighted average interest rate on borrowings of the company.

The firm's consolidated financial borrowings stood at Rs 2,259 crore as of Sept. 30, compared with Rs 2,227 crore in March-end, according to a separate exchange filing.

IPO Struggle

In August, the Mumbai-based company raised Rs 2,850 crore from its IPO before expenses and taxes, compared with the initial expected Rs 4,500 crore.

The issue was subscribed 92 percent, with global institutional buyers picking up the bulk of shares on offer. The QIB portion of the issue received full subscription, while the high net-worth investors bought 89 percent of the shares allocated to them. The retail portion witnessed 30 percent subscription.

Promoters Shapoorji Pallonji and Khurshed Yazdi Daruvala had put on the block shares worth Rs 2,083 crore and Rs 1,042 crore, respectively, in the IPO. Promoters had committed to repay the company’s inter-corporate loan within 90 days of listing which is now being reworked.

Sterling & Wilson Solar's shares fell 20 percent to Rs 400.7 apiece, as of 10:30 a.m. The stock has declined 48.5 percent since listing.

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