Mumbai-based drugmaker Wockhardt, country’s sixth-largest drug maker by revenue is in discussions with ICICI Venture, ChrysCapital and other private equity firms to divest a 15% stake to pay off investors in its $110-million foreign currency convertible bonds (FCCB) issue, which comes up for redemption next year.According to sources Wockhardt is looking to raise $100 million (around Rs 500 crore) from PE funds at nearly triple the premium over its current market price of Rs 96.45 per share.
The firm is looking to sell 15% stake, but is unlikely to get the kind of premium it is looking for. PE firms are looking for a more realistic valuation of the company. Under India’s takeover code, if a single investor buys 15% equity in a company, it has to make an open offer for buying an additional 20%. But if a clutch of investors together buy 15%, the open offer option does not get triggered.Wockhardt’s FCCB issue is due for redemption in October 2009 at a conversion price of Rs 486 per share.
Another option available to Wockhardt is to raise debt, including ECBs, for taking care of the liabilities arising out of FCCB conversion. But the company’s debt obligations are already in the region of Rs 2,800 crore, and with a debt-equity ratio of 2.3:1, its capacity to raise loans could be constrained.
Read more in The Economic Times article.
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