FCCB market sees flurry of activity

Glenmark Pharmaceuticals launched a $70 million issue of foreign currency convertible bonds (FCCBs), while Essar Oil said it had successfully completed an FCCB issue aggregating to $166 million).

Strides Arcolab has announced that it will consider a proposal to issue FCCBs or such other securities to fund the proposed capacity expansion.

Essar Oil said it had raised the money towards part financing of the cost of the Vadinar Oil Terminal Project being set up at Vadinar in Jamnagar through its wholly owned subsidiary Vadinar Oil Terminal Ltd.

In a landmark deal structure, Glenmark said its 5-year FCCBs will launched in two tranches; the first tranche of $20 million is convertible at a conversion price of Rs 862.394 per share, which is at a 71 per cent premium to its volume-weighted average closing price of Rs 504.324 on the Bombay Stock Exchange on January 31, 2005.

The second tranche aggregating $50 million is convertible at a conversion price that is higher of either Rs 500 per share or at a 35 per cent premium to the average of its volume weighted average closing price for the period between September 15, 2006 and November 14, 2006.

JP Morgan is the lead manager and sole book runner for the Glenmark offering. A senior official at J P Morgan said, "The most unique thing about this deal was that the structure allows Glenmark to retain 100 per cent of any share price upside in the 21 months following the issue of the convertible bonds. This is a first of its kind deal in Asia and Europe."

Meanwhile, Lyka Labs has announced that it will raise up to $ 6.5 million by way of Global Depository Receipts (GDR) to part finance its capital expenditure / working capital requirement, development of new molecules, further strengthen the R&D activity, develop contract research facility, undertake clinical research operations and for strategic business acquisitions.