Morepen inks deel with Avenue, to raise Rs 140cr

Morepen Laboratories today said it will raise Rs 140 crore through the issue of equity shares and warrants to US-based Avenue Capital Group and its promoters.
"The entire Rs 140 crore being brought in by the company as fresh capital will be utilised for repayment to banks under Corporate Debt Restructuring (CDR) scheme for which a settlement has already been arrived at," the company informed BSE.

"Morepen Laboratories today announced the signing of a deal with Avenue Capital through its subsidiary G L India Mauritius III for a 14.99% stake in the company," it added.

As per share subscription agreement signed today, Avenue Capital is subscribing 3.85 crore shares at Rs 20 each for Rs 77.06 crore. In addition to this, the US fund would also subscribe to warrants up to 5% of the enhanced capital base for Rs 27.04 crore.

Besides, promoters would subscribe to warrants that can be converted into 10 crore equity shares, for Rs 60 crore.Post subscription the promoter's stake in the company would stand at 46%, G L India Mauritius (Avenue Capital) would hold 14% and the public holding would be 38%.

Avenue Capital to pick 15% in Morepen for Rs 80 crore

US-based Avenue Capital, a hedge fund that focuses on distressed and undervalued debt and equity opportunities, is in an advanced stage of negotiations to pick up an equity stake in Delhi-based loss-making pharma company Morepen Laboratories. Sources indicated that Avenue Capital could pick up 15% stake for around Rs 80 crore, and the deal which is expected to be completed by the middle of this month.

The fund is offering Rs 20 per share of Morepen Labs, which works out to a 28% premium to Friday’s market price of Rs 15.6. However, it is about 40% higher than the share price when negotiations between the two began.

Sources close to the deal also said Avenue has the option to subscribe 5% more of the equity by way of warrants in the future. For this, they will have to make a down payment of 10% of the agreed price upfront, while the remaining will be paid up in 18-months. This will trigger off the mandatory requirement of an open offer.

Currently, Morepen’s equity base is of about 21.1 crore shares. If Avenue’s stake goes up to 20%, the number of shares will go up to 37.06 crore shares including the warrants made to promoters and investors. The company has issued 75 lakh shares or 3.43% to banks under a debt restructuring settlement at the same rate. This will result in a promoter holding of about 46%.

Read more in The Economic Times article.

Morepen to part-pay debt as StanChart PE buys stake

The debt-ridden Morepen Laboratories has got a fresh lease of life. Standard Chartered Private Equity (SCPE) has picked up 10% equity in Morepen through an issue of fresh shares. The Delhi-based mid-sized pharma company is now ready to repay around Rs 103 crore debt to banks and financial institutions as part-settlement under the corporate debt restructuring (CDR) scheme.

Meanwhile, lenders have set a deadline of June 30 to conclude the deal. “If the deal is not concluded this month, we will pull out the CDR support,” said one of the lenders, adding that the CDR package is under negotiation for almost a year.

Sources close to the development said the company has been negotiating with its lenders to restructure debt for almost seven years. The debt restructuring programme was delayed partly due to difference among its 31 lenders. Sources said the promoters and SCPE would infuse Rs 100 crore each. Following this, promoters’ stake will increase from 33% to nearly 50%, while SCPE will hold 10% equity. The lenders, who will convert their debt into equity, will hold another 12% and the balance will be with the public.

Read more in The Economic Times article.