Suzlon Energy Ltd. , one of the world’s largest wind-turbine makers, has sold it its German subsidiary, Senvion SE, in a billion-dollar deal, making it the latest Indian company to unload assets to shed debt.
Suzlon said Thursday that the U.S.-based private-equity fund Centerbridge Partners LP had bought the German company for 1 billion euros ($1.16 billion). Suzlon stands to earn another €50 million from the deal, depending on certain conditions, the company said in a statement, which didn’t describe the conditions.
The Indian wind power company has been selling assets for years to help deal with its debt of about $2.6 billion that was left over from a decadelong expansion and acquisition spree.
“The proceeds will be used for debt repayment thereby reducing interest cost and augmenting business growth,” Tulsi Tanti , chairman of Suzlon Group said in the statement filed to India’s stock exchanges.
The Indian company originally took control of Senvion—formerly known as REpower Systems—in 2007 and finished acquiring all of its shares in 2011, paying a total of about €1.8 billion for the company.
Suzlon has restructured local loans, refinanced international debt and cut the number of people it employs to try to streamline its costs as its business has suffered from weaker-than-expected demand for turbines.
Suzlon shares, which had surged as much as 20% in recent weeks on hopes a deal was imminent, fell Thursday.
Analysts said Suzlon will still likely have to sell more assets and cut costs further to become profitable.
“There’s still a long way to go for the company to clean up its books,” said Sanjeev Zarbade of Kotak Securities.
A number of Indian groups are still dealing with debt hangovers left over from better times before 2008. Roads-and-construction conglomerate Jaypee Group, for example, has been selling assets to offset its more than $10 billion in debt.
In December it sold two cement plants for $852 million. The group has also signed an agreement with JSW Energy Ltd. to sell two hydropower plants for more than $1 billion. The company said the sale will likely be completed by April 1.
Suzlon, which is based in the western Indian city of Pune, was expanding rapidly until a few years ago, riding a boom in green-energy investment. But the withdrawal of government subsidies in India and other markets, in addition to the global economic slowdown, knocked the wind out of its business.
The company hopes that with the cash from the asset sale, it can now focus on India, as government incentives are improving. India in 2014 added incentives for wind power generators that is expected to increase demand for Suzlon’s products.