The rating on Azure Power Solar Energy Private Limited’s (APSEPL) USD350.1 million 5.65% senior notes due 2024 is not affected by the sale of Azure Power Global Limited’s (APGL) rooftop solar portfolio, says Fitch Ratings.
Fitch does not expect the transaction to trigger the change of control provision in the indenture of the notes.
APSEPL’s ultimate parent, APGL, announced that its 97.5%-owned subsidiary Azure Power India Private Limited (API) has signed a binding agreement to sell its non-core rooftop solar portfolio to Radiance Renewables Pvt. Ltd. (Radiance) for INR5.37 billion, subject to purchase price adjustments. The portfolio includes 32.5MW of rooftop projects that are part of the restricted group of 10 operating entities (Azure RG2) underpinning the rating on APSEPL’s USD350.1 million notes. API owns 100% of Azure RG2.
The rights of the noteholders have been protected in the transaction. As part of the sale agreement, 48.6% of the equity ownership of Azure RG2’s projects will be transferred to Radiance, and the remaining 51.4% will be transferred after refinancing of the notes. All of the cash flows related to such projects will remain in the restricted group to service debt and cannot be upstreamed until the refinancing and the remaining 51.4% stake is transferred to Radiance. APSEPL says that under such an arrangement, APGL will effectively retain 50.115% stake in the rooftop projects of Azure RG2. As such the transaction will not trigger the change of control provision in the bond document.
