Sterling and Wilson Renewable Energy Ltd shares dropped 2% on Thursday, February 8, after the company disclosed that a customer terminated the contract and invoked a bank guarantee of AUD 16.59 million (about ₹90 crore) with regard to a project in Australia by its subsidiary firm. The subsidiary is likely to take action against the customer, the company said.
The company's step-down subsidiary, operating in Australia, successfully completed the project in July 2022.
In a stock exchange filing, the company said that the subsidiary was in settlement discussions with a customer with regards to a project in Australia. However, the customer unexpectedly terminated the engineering, procurement and construction (EPC) and operations & maintenance (O&M) contract for reasons unspecified.
The subsidiary has strongly refuted the termination notice, the company added.
Consequently, the customer has invoked an outstanding bank guarantee totalling AUD 16.59 million (₹89.73 crore), which has been promptly transferred to the issuing bank.
In response, the subsidiary firm will be initiating appropriate legal actions against the customer. This action will involve contesting the contract termination, challenging the invocation of the bank guarantee, and seeking compensation for damages.
In December, Sterling and Wilson Renewable Energy launched its Qualified Institutional Placement (QIP) to raise up to ₹1,500 crore.
Reliance New Energy owns a 40% stake in Sterling & Wilson Renewable Energy Ltd.
Proceeds from the issue were likely to be utilised in the repayment of the company's debt.
Sterling & Wilson Renewables is currently in the process of negotiating the terms for a USD 2.2 billion order awarded by the Nigerian Government to its joint venture.
At 9.23 AM, shares of Sterling and Wilson Renewable Energy were trading flat at ₹616.25 apiece on BSE.
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