Sterling and Wilson Renewable: Sterling and Wilson Renewable plans to raise Rs 1,500 crore equity

Mumbai: Shapoorji Pallonji Group-promoted Sterling and Wilson Renewable Energy Ltd (SWREL) is considering an equity share sale to raise up to ₹1,500 crore to repay its debt maturing this financial year, said people aware of the development.

One of the options under consideration is placing shares with investors through the qualified institution placement (QIP) route, the people cited above said.

The power generating company, wherein a Reliance Industries-linked entity has picked up 40% equity in 2022, had payment obligations of ₹1,000 crore by December 2023, according to a rating report by Acuite dated August 29.

The move to raise funds comes within months of two bank guarantees (BG) amounting to ₹390 crore invoked by overseas clients alleging improper execution of a project undertaken by its overseas subsidiary Sterling and Wilson International Solar FZCO. Sterling claims that the bank guarantees were wrongfully invoked and initiated legal action against the two customers, according to a stock exchange disclosure by the company.

SWREL had extended corporate guarantees towards these BGs, which were issued by Emirates National Bank of Dubai, and thus, it is obligated to pay ₹390 crore by the end of October 2023.The company is in talks with Emirates NBD to convert the non-funded obligation (BG) into a fund-based obligation (a term loan), one of the persons cited above said. If the ₹390 crore BG is converted into a loan, the company’s liabilities will rise but at the same time it will get some breather, he added.

Emirates NBD and Sterling and Wilson did not respond to ET’s request for comments.The fundraising is aimed at making SWREL a debt-free company and thus would improve its valuation. The company has a market cap of ₹7,003 crore, and its shares closed at ₹369, down 1.72% over the previous day at the Bombay Stock Exchange.

A separate report by India Ratings Research on SWREL dated August 3 said the company had free cash and cash equivalents of ₹63 crore as of June 30, 2023. During FY23, it availed ₹1,500 crore in additional debt, and the major portion of it is due in FY24. The company has scheduled principal payments of ₹1,090 crore in FY24, ₹370 crore in FY25 and ₹220 crore in FY26. “The invocation of BGs will further impact the stretched liquidity position of the company,” the same report stated.

India Ratings said that the SWREL order book remained at ‘healthy levels’ of ₹4,900 crore on June 30. In the first quarter of this financial year, it secured two projects amounting to ₹4,700 crore, one each in Rajasthan and Uttar Pradesh.

Acuite, in its report, stated that after RIL acquired 40%, the company is expected to have significant operational synergies as Reliance has forayed into the green energy space. The rating agency believes that “SWREL will be the preferred EPC subcontractor for major Reliance projects… in executing complex solar projects globally.”

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