Dhanuka Laboratories Ltd has taken over Orchid Pharma Ltd as per an insolvency resolution plan that was approved by courts and the debt-laden company’s lenders.
Orchid Pharma said in a stock-exchange filing a monitoring committee overseeing its resolution plan has decided to extinguish 99% of its share capital and allot zero-coupon debentures with a face value of Rs 3,650 crore to Dhanuka.
The committee decided to issue the remaining shares to Orchid’s secured financial creditors including State Bank of India and Bank of India as part of an agreement to settle their debt. Other creditors are Punjab National Bank, ICICI Bank, Axis Bank, IDBI Bank, Union Bank of India and Allahabad Bank.
Gurugram-based Dhanuka had won approval for its resolution plan for Orchid from the National Company Law Tribunal in June last year. However, the plan was contested at an appeals tribunal and the Supreme Court.
Last month, the Supreme Court set aside the appeals court’s order against Dhanuka’s resolution plan to acquire the Chennai-based drugmaker.
Previously, Ingen Capital had emerged as the winner of the race to acquire Orchid with a bid of Rs 1,490 crore in 2018. However, Ingen later failed to make the payment.
In May 2019, Dhanuka, Hyderabad-based Covalent Laboratories Pvt. Ltd and Tamil Nadu-based Accord Life Spec Pvt. Ltd joined the race to acquire Orchid Pharma.
As per the NCLT’s June order last year, lenders to Orchid Pharma will get Rs 1,116 crore going by the resolution plan offered by Dhanuka. This is around 35% of the total debt the company owed its lenders.
Dhanuka's resolution plan had initially received a favorable vote by the committee of creditors with a 67.07% voting share. However, a unit of Punjab National Bank later changed its decision, resulting in the vote share falling below the required 66%. This had prompted Accord Life Spec to approach the NCLT.
Following this, the NCLT had ruled in favour of Dhanuka’s offer.
Orchid was among the 28 large corporate defaulters in the Reserve Bank of India’s second list of debt-laden companies that were referred for insolvency in August 2017. It owed a total of Rs 3,200 crore to a consortium of 24 banks.