Wind power major Suzlon Energy said its plan to raise Rs1,800 crore through a rights issue of shares to the existing shareholders, including non-resident Indians,  stands cancelled despite an approval by the cabinet committee on economic affairs (CCEA).

The Cabinet Committee on Economic Affairs (CCEA) today said it has approved the Rs1,800 crore rights issue of equity of Suzlon Energy to its existing shareholders, on recommendations by Foreign Investment Promotion Board.

Companies wanting to issue rights equity of more than Rs600 crore has to seek cabinet approval for the same.
 
Suzlon, however, insisted that the rights issue has been cancelled despite approval from CCEA.

The Suzlon board had, in September, approved plans to raise up to Rs1,800 crore through allotment of shares to the existing shareholders on a rights basis. But it later suspended the plans due to choppy market conditions.

Reports early this week had said that private equity players Carlyle Group and TPG Capital among others were looking at buying a stake in Suzlon Energy Ltd,  the world's fifth largest wind turbine maker, which was seeking to raise $500 million.

Suzlon, which needs a large part of the money to buy Portugal-based Martifer's stake in its German unit REpower by May, wants to sell a 10-15 per cent holding for about $300 million, the sources said.

The company hopes to raise another $200 million through a debt offering or by selling stakes in other units, the sources who are involved in the transaction said, adding that a deal could be reached in the next month or so.
 
Last week Suzlon had agreed with Martifer to stagger the payment schedule to buy the stake, after it suspended the Rs1,800 crore ($375 million) rights share offer due to weak stock markets.

Under the revised terms Suzlon will need to pay 65 million euros ($91.4 million) in December, 30 million euros in April 2009 and 175 million euros in May to buy Martifer's 22.4 per cent stake and increase its holding in REpower to 91 per cent.

The bankers said Suzlon is looking at placing the shares at a healthy premium to the current market price.

Suzlon, whose shares have fallen 84 per cent so far in 2008, plagued by the quality woes and on concerns about further equity dilution. In October the company said it had set aside around Rs48 crore for restoration of faulty wind turbines and blade failure in the United States and expects the retrofit programme to be completed by May 2009.

Shares in Suzlon ended 3.7 per cent higher at Rs60.45 in Mumbai. The Suzlon scrip was trading at Rs59.30, up 1.63 per cent, in the afternoon trade on the BSE.