Wockhardt has set a target to mobilise Rs 790 crore by selling its non-core businesses
as part of its corporate debt restructuring (CDR) plan, which its lenders approved last week, nearly two-and-a-half months after the Khorakiwalas-controlled pharma company approached them.
The CDR plan, which was finalised on June 30, is intended to put the funds-starved company back on the rails with the lenders restructuring loans, providing fresh fund and the promoters chipping in capital.
The lenders will provide a ‘priority loan’ of Rs 516 crore and working capital loan of Rs 255 crore while the Khorakiwalas have agreed to chip in Rs 70 crore, according to people familiar with the restructuring.
The people close to the development said the company will have to repay the priority loan in eight equal quarterly instalments starting from September 15, 2010. A Wockhardt spokesperson confirmed that the company’s CDR has been approved but declined to provide further details.
In order to part finance the repayment of the loan, the company has promised to generate funds by selling non-core assets over six years. Wockhardt has raised nearly Rs 300 crore from the sale of its German subsidiary Esparma and its animal healthcare business. It is also believed to be in talks with Abbott and Danone for the sale of its popular brands, ProtineX and Farex.
Also, the interest payable on all existing loans has been set to 10% as against an average rate of 13-14% on existing loans. However, only 8% interest is payable on a monthly basis and the balance will be converted into non-convertible preference shares.
These shares can be redeemed in September 2018. The company has been granted moratorium period of one year starting June 30 time on all existing loans.
The restructuring will help Wockhardt which has been going through a liquidity crunch following its aggressive expansion plans abroad and the change in the global economic environment.
Wockhardt’s foreign currency convertible bonds (FCCBs) of $110 million are due for redemption in October this year. FCCB holders are being offered two options as part of the CDR.
The first choice open to them is to exchange existing bonds for preference shares of the company. This will be equivalent to the redemption value. The second is a cash buyback option though those opting for this route will have to offer a discount, though details could not be obtained.
Source: Economic Times