Orchid to raise $75 mn via FCCBs

The Chennai-based pharma company, Orchid Chemicals & Pharmaceuticals Ltd. (Orchid) is proposing to raise up to $75 million to fund its long-term growth plans.

Orchid's board, which met here today, considered the issue of foreign currency convertible bonds (FCCBs) in the international markets.

To preserve the promoters' current 16 per cent stake in the company on conversion of the bonds to equity, the board has also considered allotment of 2 million warrants convertible into equity shares to the promoters based on the Securities and Exchange Board of India regulations. The warrants will have a lock-in period of 3 years from the date of allotment.

The board has decided to raise the authorised share capital by Rs 11 crore from the present Rs 34 crore (3.4 crore equity shares of Rs 10 each) to Rs 45 crore (4.5 crore equity shares of Rs 10 each). The company has scheduled an extraordinary general meeting on April 10, 2004 to get the shareholders' nod for the proposals.

The funds raised will be deployed to further diversify and strengthen its foray into the US generics and other regulated markets.

Additionally, Orchid will be establishing new US Food and Drug Administration-compliant infrastructure to develop and manufacture drugs in diverse therapeutic groups, with emphasis on non-penicillin, non-cephalosporin products.

The company has already drawn up project plans in this area based on select products, which offer considerable market potential.

Orchid would also be utilising part-proceeds of the issue to accelerate its drug discovery programs, which have already generated interesting leads, now in advanced pre-clinical evaluation.

Orchid had earlier implemented an investment strategy involving participation from Schroder Ventures and International Finance Corporation, under which US FDA-compliant facilities have been established for cephalosporin bulk drugs and formulations.