Wockhardt Chairman Habil Khorakiwala can breathe easy, as bankers have approved the debt restructuring package he had sought three months ago.
The pharmaceutical company informed the Bombay Stock Exchange today that the Corporate Debt Restructuring (CDR) Empowered Group headed by ICICI Bank approved the package on June 30.
"Restructuring of debt, release of working capital and fresh priority debt by banks pending divestment of non-core assets is a positive step forward and will provide a great impetus to the core operations of the company," Wockhardt said.
While the company’s spokesperson declined to give details of the package, bankers familiar with the developments said Wockhardt had to commit sale of non-core assets at an estimated value of Rs 790 crore within six years to repay the priority loans. Further, the promoters will have to infuse another Rs 70 crore. The lenders have given Wockhardt a moratorium of a year on all its existing loans.
The company sold its German subsidiary, Esparma, and the animal health division in the past few weeks, but is yet to officially disclose the earnings from their sale. Sources close to the company say Esparma was sold to Mova GmbH for Rs 120 crore and the animal health division to Vétoquinol, a French veterinary care company, for Rs 170 crore.
Wockhardt's auditor Batliboi and Co had earlier said the company had to repay loans and related liabilities worth Rs 1, 414.4 crore before the end of 2009, if the CDR failed to go through. As of December 2008, the company had net liabilities worth Rs 3,400 crore.
The sources said, as per the package, a priority loan of Rs 516 crore would be given by the CDR lenders, repayable in eight equal quarterly instalments starting September 15 next year. Wockhardt can also avail of an additional working capital of Rs 255 crore.
The foreign currency convertible bond (FCCBs) holders will have two options: Cash buyback or exchange of existing bonds with the preference shares of the company equivalent to the redemption value.
The company had to repay FCCBs worth $110 million, which were due for redemption in October, and external commercial borrowings of $250 million.
In the first option, the company will buy back the bonds only if the bondholders offer average discount in excess of 65 per cent of the redemption value of the bond.
By the second option, half of the preference shares will be optionally convertible to equity after October 25, 2015, at the then applicable Sebi formula. The balance will be given cumulative dividend and be redeemed at a premium of 38 per cent on December 31, 2018.
