Wockhardt will mobilise Rs 790 crore by selling its non-core businesses as part of its restructuring exercise, reports Economic Times.Habil Khorakiwala-owned company’s corporate debt restructuring(CDR) programme has been approved by the lenders which could help the company repay loans at lower interest rates.
At the same time promoters have got revoked some shares which were pledged with financial institutions.Wockhardt had sought the CDR package three months back, which has been approved by the empowered group headed by ICICI Bank on June 30.
In a statement Wockhardt said, "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 shall provide a great impetus to the core operations of the company."
As per other media reports the broad contours of the package involves Wockhardt committing to sell non-core assets to generate Rs 790 crore within six years to repay the priority loans. In addition the promoters will infuse Rs 70 crore. The lenders have also provided
Wockhardt a moratorium of a year on all its existing loans. The interest payable on all outstanding loans has been cut to 10% as against an average rate of 13-14% on existing loans.
This CDR package approval comes after the company sold its German subsidiary Esparma and the animal health division in the past few weeks(scooping close to Rs 290 crore as per reports). It is also said to be in talks with Abbott and Danone for the sale of its popular brands, ProtineX and Farex.
The package involves a priority loan of Rs 516 crore from the CDR lenders, repayable in eight equal quarterly instalments starting September 15, 2010. Wockhardt can also procure additional working capital of Rs 255 crore.
Those who hold foreign currency convertible bond (FCCBs) 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 outstanding FCCBs worth $110 million due for redemption in October’09 besides external commercial borrowings of $250 million, making it a heavily leveraged firm.
If the first option is exercised, Wockhardt will buy back bonds only if the bondholders offer average discount in excess of 65% of the redemption value of the bond. In the second option, half of the preference shares will be optionally convertible into equity after October 25, 2015 and the balance will be given cumulative dividend and redeemed at a premium of 38% on December 31, 2018.
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 of Rs 3,400 crore.
PROMOTERS GET BACK SOME SHARES
Meanwhile, the promoters of Wockhardt have got some pledged shares revoked. At the end of March’09 promoters held 73.64% stake comprising 80.5 million shares. Out of this 63.18 million shares representing almost 58% of the total equity of the company(and 78% of promoters holding)were pledged or encumbered.
Now two promoter entities Khorakiwala Holdings & Investments and Dartmour Holdings(who jointly held as much of 70% of the company as of March’09) have disclosed that they have revoked 5.3 million shares or about 5% of the company’s equity.