Suzlon FFCB default : Wisdom prevails.

Now as we see it, the money will be invested in creating value of its business operations which will enhance the profits of the company thereby generating smiles to the vendors, employees and financial lenders.

Pune, Maharashtra, October 20, 2012 /India PRwire/ -- The news that Suzlon which is one of the worlds leading wind turbine manufacturing companies, defaulted on its current FCCB commitment may have come as shock to some but the fact remains that this minor stumble will not come in the way of future aspirations for the companys business. If we recollect in July when Suzlon paid its first FFCB payout, there were suggestions from experts that they should have defaulted then and instead use the millions to boost their own business. Its no secret that the wind turbine industry world over is going through a rough patch. By directing the cash flow into the companys business Suzlon would have been far better off. But the company promptly paid its FCCB bondholders which again showed its appreciation to the unsecured lenders. Now as we see it , the money will be invested in creating value of its business operations which will enhance the profits of the company thereby generating smiles to the vendors, employees and financial lenders. The Suzlon story is indeed is an example of how to weather the rough winds and come out strong.

In the past, companies like Wockhardt have faced similar situations but recovered sharply.

When companies issued FCCBs during the 2006-08 boom, it seemed a good idea. The rupee was at 40-to-the-dollar levels and the Sensex around 20,000. The steep drop in the value of the rupee against the dollar over the past two years has exacerbated the problem. "The result is many FCCB issuers may have trouble finding funds to repay bondholders. Those who can't will face payment default," said a Standard & Poor's (S&P) report. When companies issued FCCBs during the 2006-08 boom, it seemed a good idea. The rupee was at 40-to-the-dollar levels and the Sensex around 20,000. The steep drop in the value of the rupee against the dollar over the past two years has exacerbated the problem. "The result is many FCCB issuers may have trouble finding funds to repay bondholders. Those who can't will face payment default," said a Standard & Poor's (S&P) report.

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Suzlon default FCCB - A blessing in disguise.

This is a good development for business. Now the company will be able to focus its resources in creating value in the business instead of paying it to unsecured lenders.

Suzlon is one of the few companies who have honored their FCCB commitments in recent times.

Not just one but 11 banks show confidence in Suzlon with SBI leading the way! Way to go Suzlon. Suzlon is one of the few companies who have honored their FCCB commitments in recent times. That is very commendable. While everyone was spreading rumors they have done what they have committee.