Orchid Chemicals and Pharmaceuticals Ltd (OCPL), has received sanction of $100 million (around Rs 532 crore) by way of External Commercial Borrowings (ECBs) from a consortium of Indian banks to redeem its outstanding Foreign Currency Convertible Bonds (FCCBs), which falls due in February, 2012.
The ECBs and the internal accruals would support the company to redeem the outstanding FCCB of $117 million (Rs 622 crore), along with the yield-to-maturity which would fall due in February, 2012. The total redemption value is $167 million (Rs 888 crore), according to a company official.
“We are fully geared to redeem the maturing FCCBs. The ECB sanction that we have received, coupled with our internal accruals will enable us to comfortably redeem the outstanding FCCBs on the due date,” stated K Raghavendra Rao, chairman and managing director, OCPL in a company announcement.
With over 85% of the company's sales coming from exports billed in US Dollar, it has a natural hedge against currency fluctuations, said Rao. The depreciation of Rupee would support the company to utilise its internal accruals to fund the rest of the amount for redeeming the outstanding FCCBs.
OCPL, in its annual general meeting in the end of July, 2011, has enabled a resolution with the share holders to raise long term funds up to Rs 1,000 crore from domestic or overseas capital markets for redemption of the outstanding FCCBs and other business purposes.
However, with the tie up of funds to redeem the outstanding FCCBs, the company is not keen on raising further fund from the market, also considering the current market situation, said an official.
According to earlier reports, the company floated zero coupon FCCBs worth $175 million on February, 2007, with five year maturity period, to raise capital for closing its loan requirements and investments for capacity expansion. After some conversions and buybacks by the company, the current outstanding FCCBs is at $117 million.
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