(Reuters) - Wind turbine maker Suzlon Energy Ltd said it had agreed to sell its German unit Senvion SE to Centerbridge Partners LP for 1 billion euros ($1.16 billion) in an all-cash deal that will help the group reduce its debt.
Suzlon and the U.S. private equity firm have signed a binding agreement, which also has a future earn out clause of an additional 50 million euros, the companies said in a statement on Thursday.
Suzlon, which has been under pressure in the last few years from a slowdown in global turbine sales and a debt pile, said it would use proceeds from the sale to repair its balance sheet and focus on higher growth markets like India and the United States.
On Monday Suzlon said it had not approved the sale of Senvion while on Jan. 7 the company had denied it was in talks with potential buyers, calling a media report "baseless and false".
"We are pleased to announce this development, which is in line with our strategic initiative to strengthen our balance sheet. The proceeds would be used for debt repayment thereby reducing interest cost and augment business growth," Suzlon Chairman Tulsi Tanti said in the statement.
The company was forced to restructure $1.8 billion of debt after defaulting on a $200 million convertible bond redemption in 2012.
Shares in Suzlon opened up 6.1 percent on Thursday against a flat benchmark index.
Senvion, previously known as REpower Systems SE and a Suzlon subsidiary since 2011, makes wind turbines for onshore and offshore markets.
Together with Senvion, Suzlon was the world's fifth largest wind turbine manufacturer.