Suzlon shares may react on Wednesday after Dilip Shanghvi and Associates terminates 2015 deal

Shares of Suzlon Energy Ltd will be in focus on Wednesday after Dilip Shanghvi and Associates decided to terminate the amended and restated shareholders’ agreement signed in February 2020.

With the expiry of the deal, Hiten Timbadia, nominee director of the investor group on the board of Suzlon, has also resigned with effect from September 26.

However, the wind turbine manufacturer has clarified that the termination of the agreement will not impact the company’s operations.

In a separate statement, Dilip Shanghvi also said that the formal shareholders’ agreement has been terminated, but he and his companies will remain investors in the company.

“We are excited about the future and prospects of wind energy and its importance in achieving the net-zero objectives of our Prime Minister and government,” the statement said.

Shanghvi’s statement further said that they support management’s plans to aggressively grow the business as well as their efforts to gain market share. “The company has seen a turnaround in a challenging environment, which is a positive sign,” he said.

In February 2020, Suzlon’s board had approved the debt restructuring proposal of its and certain identified subsidiaries under the RBI circular of June 2019. Under this agreement, the company had issued 100 crore equity shares, of which 4.1 lakh were secured up to 0.01 per cent, optionally convertible debentures of Rs 1 lakh each and up to 50 crore warrants of Rs 1 each.

The board also approved the issuance of equity shares or equity linked instruments worth Rs 1,000 crore. Those who were allotted shares or equipment of the company also include Shanghvi Finance Private Limited. Ltd., Aditya Medisales Ltd., and other family members of Dilip Shanghvi.

In 2015, Sun Pharma promoters had acquired 23 per cent stake in Suzlon Energy for Rs 1,800 crore. Shanghvi had also expressed his intention to the company’s promoters to fully participate in the rights issue, through which it had raised Rs 1,200 crore, in 2022.

Suzlon had allotted 10 million shares on preferential basis to members of the Shangvi family and companies owned by them, taking their cumulative stake to 23 per cent. Following that announcement, Suzlon shares were up 20 percent on the day.

Based on the June quarter shareholding pattern, Dilip Shanghvi’s family members and companies held at least 7.4 per cent stake in the company.

On Tuesday, Suzlon shares closed at Rs 25.95 with a gain of 1.8 per cent.

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