Wockhardt investor QVT may offer new recast plan

The American private equity fund QVT Advisors is understood to have proposed an alternative restructuring plan to resolve the deadlock with Wockhardt group following the drug firm's failure to honour its bonds.

According to sources, QVT along with other subscribers of $110-million foreign currency convertible bonds (FCCBs), issued by Wockhardt in 2004, which it had defaulted last year, has submitted a revamp plan to the domestic drug maker and its corporate debt restructure (CDR) cell.

Wockhardt has a debt of over Rs 3,700 crore and undertook a corporate debt recast programme last year, under which it offered to settle repayment of the $110-million FCCBs, issued by it in 2004, at a discount.

However, as per the plan being proposed by QVT, bond holders will exchange their defaulted bonds for fresh FCCBs with a five-year maturity and those FCCBs would be mandatorily converted into shares following their maturity.

"QVT looks forward to engage in a constructive dialogue with Wockhardt and the CDR lenders reaching an agreement that is fair to all involved," the US-based fund said in a statement.

Wockhardt officials could not be contacted for the comment.

QVT said, it believes that restructuring would benefit the drug firm as conversion of new FCCBs into equity will increase the equity base of the company by up to around $75 million, thereby reducing leverage and strengthening the balance sheet.

A group of bond holders led by QVT, which had subscribed to 41 per cent of the FCCBs, had refused to undertake offer and filed a winding up petition in the Bombay High Court and now has decided to file similar petitions in other countries seeking liquidation of the group's assets in these regions for debt repayment.

QVT has also threatened to block the debt-ridden Wockhardt's Rs 620-crore sale of nutrition business to Abott to repay a part of its debt.