3 pharma majors eye Wockhardt's Irish unit

Three leading international pharma companies have started due diligence to acquire Wockhardt Ltd’s wholly-owned Irish generic drug company, Pinewood. The company, which has given Swiss bank UBS the mandate for the sale, has been valued at Rs 1,000 crore.

The move is part of the financial restructuring plan by the Habil Khorakiwala family, promoters of Wockhardt group, to raise around Rs 1,925 crore by selling Pinewood, part of Wockhardt Hospitals and its veterinary division and from a fresh working capital loan (see table).

Last week, the company was forced to opt for corporate debt restructuring (CDR), following a steep 17.25 per cent rise in net debt to Rs 3,400 crore in December 2008 from Rs 2,900 crore a year ago.
 

PRESCRIPTION FOR LIQUIDITY
Sale of Pinewood	1,000
24% stake sale of  Wockhardt Hospitals	500
Working capital loan from SBI and other banks	175
Sale of veterinary business	250
Total	1,925
(Figures in Rs crore)

A Wockhardt spokesperson declined to comment on the details of the restructuring plan but said the company has robust operations and was facing a temporary liquidity issue. “We have applied for corporate debt restructuring and the passage of this should resolve most of the liquidity issues in the coming months,” a statement from the company said.

Pinewood, which Wockhardt bought in 2006, is the largest and fastest-growing generic pharma company in Ireland. Established in 1976, it has over 200 prescription and over-the-counter products in the market.

Pinewood has a large manufacturing facility in Tipperary focusing on creams, liquids, powders and sachets. These products primarily cater to the UK and other European markets. Pinewood also exports to New Zealand, Afghanistan and countries in Africa. The facility is also used by large transnational companies like Pfizer and Sandoz to source products.

Khorakiwala is also planning to divest 24 per cent in the super-speciality hospital chain Wockhardt Hospital Ltd, which runs 12 hospitals across the country. Fortis and Apollo Hospitals were reportedly interested in picking up the stake, but a Wockhardt spokesperson denied that it was in talks with any of them. Khorakiwala, however, intends to keep management control of the hospital chain.

Wockhardt Hospital had tried to enter the capital market in January 2008 to raise around Rs 700 crore, but was forced to withdraw, owing to the steep fall in the stock market.

Wockhardt’s promoter-family, which holds 74 per cent in the company, has pledged 79.21 per cent of its shareholding to various banks and institutions.

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