(Bloomberg) -- Azure Power Global Ltd., an Indian renewable-power firm that’s controlled by Canadian pension funds, faces delisting from the New York Stock Exchange after failing to hit a deadline for its overdue 2022 financial statements.
The company is in the midst of an investigation into alleged “corrupt activities” in connection with one of its projects. The probe has been going on since last year, when it received a whistleblower complaint into misconduct by employees, and the new chief executive officer quit suddenly. The shares have lost more than 80% of their value since that disclosure.
The Azure investment has been a governance nightmare for Caisse de Depot et Placement du Quebec, Canada’s second-largest pension manager, which acquired 56% of the Azure at a cost of about $480 million, according to Bloomberg calculations. Ontario Municipal Employees Retirement System owns about 23%, according to data compiled by Bloomberg.
Azure said Thursday it has appointed a new accounting firm, ASA & Associates LLP, to finish the last year’s financial statements, but they won’t be done by the NYSE’s July 15 deadline. The New Delhi-based company said it may appeal any delisting decision by the exchange.
Azure has given few specifics about the allegations it’s investigating, though they also encompass “certain asset acquisition transactions,” the company said.
In May, it appointed a new CEO and chief financial officer. “When there’s irregularities from a governance standpoint, the action plan is immediate and ruthless from the Caisse,” CDPQ CEO Charles Emond in an interview in June.
Although the Caisse has a significant loss on paper from the investment, “the reality is that there is still very good assets underneath. There is a plant, a company that distributes electricity to millions of Indians,” Emond said. “Share price is one thing, value is another one.”
Azure Power, the NYSE and the CDPQ didn’t immediately respond to a request for comment. A spokesperson for Omers declined to discuss the matter.
What Bloomberg Intelligence Says
“Azure Power could face more risk of a technical default on its dollar bonds if it’s delisted from the NYSE. It’s nearing a July 15, 2023 deadline for filing audited financial statements for the fiscal year ended March 2022, and a maximum 12-month cure period ends on Aug. 16, 2023. The firm could look to obtain a waiver to avoid a default; that would require majority bondholder consent. This might not come easily, given the lack of clarity on its ability to resolve governance issues and the lack of audited financial information.”
— Bloomberg Intelligence credit analyst Sharon Chen
--With assistance from Paula Sambo.
©2023 Bloomberg L.P.
