Azure Power must walk the talk on audit completion…
Tue Aug 1, 2023 2:57 pm Distressed Debt
Azure Power Global Ltd. on July 26 filed an appeal with the New York Stock Exchange against the NYSE staff’s decision to delist its shares over an inordinate delay in filing of audited financial reports for fiscal year ended March 31, 2022, and thereafter with the U.S. Securities and Exchange Commission. The appeal may buy the company some time to prevent a potential event of default, or EoD, which can be triggered only post delisting, on its two public U.S. dollar bonds due to breach of information covenants.  

The company has told bondholders that because of the appeal, EoD may not be triggered for two to three months. It has also commissioned a legal opinion that because its reporting obligations under the U.S. Securities Exchange Act of 1934 would continue even after delisting and its shares are expected to be available to trade on the over-the-counter expert market, triggering an EoD may not be possible by the bondholders. 

The Indian renewable company on July 13 announced a change of its auditor amid a delay in audit completion and pending investigation into allegations made in whistleblower complaints, stating that management’s immediate focus is on completion of financial audit within 14 weeks.

Even as the onshore lenders have refrained from accelerating the loans due to a delay in filing of audited financials, the acceleration risk remains because of a decline in domestic credit ratings. Azure must walk the talk on releasing audited financials this time, or else it risks losing its credibility to raise the money necessary for refinancing its roughly $700 million in bonds and finding itself embroiled in a potential legal battle with the bondholders.
Malvika Joshi

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Podcast: This week’s EMEA podcast includes discussions on the half-year report for 2023 on leveraged loans and high-yield bond covenants and what trends can be seen, key credit metrics trends for European automotive issuers and the market prices of their debt instruments, TalkTalk’s RCF lenders who are taking pitches from financial advisors ahead of 2024 maturity and primary market highlights.
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Webinar Replay: In this webinar, John Han, partner at Kobre & Kim, joined Stephen Aldred and Malvika Joshi to discuss Azure Power, the potential event of default triggers, the delisting process and risks associated with it for the bondholders, and possible recovery scenarios and outcomes. » Watch the replay
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