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| Sun's spanner in Wockhardt settlement vexes other creditors |
| P B Jayakumar & Joe Mathew / Mumbai Aug 27, 2010, 02:21 IST |
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Sun Pharma, which approached the high court here last week to be heard before any settlement was allowed between Wockhardt and its creditors on foreign currency convertible bond (FCCB) dues, demands the original FCCB terms be honoured.
In an e-mail response to Business Standard, it said several other FCCB holders don’t agree with the proposed settlement between Wockhardt and its creditors.
Sun Pharma’s move has come as a big surprise for the FCCB holders, at a time when they were on the verge of settling the issue by gaining a good premium over the first offer. Wockhardt, which first offered a premium of 3.5 cents per dollar, has since raised it to about 10 cents per dollar to QVT bondholders following intense negotiations, revealed a source.
A group of three FCCB holders led by Singapore-based hedge fund QVT holds bonds worth $42 million. Sources said Wockhardt, which had to pay an outstanding amount of $110 million by October last year, now has disputed FCCBs worth only $75 million. It had settled the issues with the remaining creditors. Sun Pharma Global holds about $20 million of FCCBs, said sources.
The group of investors led by QVT was likely to tell the court to call off their earlier winding-petition, when the matter is heard next week. They would inform the court the terms proposed by Wockhardt were acceptable, they said.
This means Wockhardt will have to move a separate winding-up petition if it wants to take on Wockhardt legally to honour the original FCCB terms.
“It was QVT, on behalf of the majority bond holders, which litigated for the past nine months, spending huge funds to reach an acceptable settlement. How can Sun Pharma now intervene in QVT’s case, as it was not part of the litigation or even negotiations? I feel it is more of a corporate rivalry to derail our settlement than regaining the money they spent,” said a top executive close to QVT and part of the negotiations with Wockhardt.
“The court will take a view on this in the coming week. It is highly unlikely that the entire settlement process will get scuttled because of the entry of a new player,” an industry player said.
Sun’s move has dampened Wockhardt’s hopes for an early resolution of its debt-related problems, he added. Recently, Wockhardt had taken most creditors on board to clear a preferential issue of up to $400 million and fresh issue of FCCBs up to $74 million as part of the settlement.
Wockhardt’s share prices tumbled 4.7 per cent on the Bombay Stock Exchange (BSE) today to close at Rs 226.65, while Sun Pharma’s share prices fell only 0.4 per cent.
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