Orchid gets $100 mn ECB to redeem bonds

Orchid Chemicals and Pharmaceuticals Ltd (OCPL) has found a way to redeem its outstanding foreign currency convertible bonds (FCCBs) pegged at $117 million (around Rs 621.9 crore) ahead of their due in February 2012. A consortium of Indian banks has sanctioned the drug major $100 million (around Rs 531.5 crore) by way of external commercial borrowings (ECBs).

The ECBs, along with the internal accruals, would support the company to redeem the outstanding FCCBs along with the yield-to-maturity coming in less than ten weeks from now. The total redemption value is $167 million (around Rs 887.6 crore), according to a company official.

OCPL chairman and managing director K Raghavendra Rao said on Monday that the company was now “fully geared” to redeem the maturing FCCBs. “The ECB sanction that we have received, coupled with our internal accruals will enable us to comfortably redeem the outstanding FCCBs on the due date,” he stated in a company announcement.

With over 85 per cent of the company’s sales coming from exports billed in US dollar, it has a natural hedge against currency fluctuations, Rao pointed out. The depreciation of rupee would support the company to utilise its internal accruals to fund the rest of the amount for redeeming the outstanding FCCBs.

Earlier this year, in end-June, OCPL had, in its annual general meeting, enabled a resolution with the share holders to raise long-term funds up to Rs 1,000 crore from domestic or overseas capital markets for redemption of the outstanding FCCBs and other business purposes.

However, with the tie-up of funds to redeem the outstanding FCCBs, the company is not keen on raising further fund from the market, also considering the current market situation, according to an official.

According to earlier reports, the company floated zero coupon FCCBs worth $175 million in February 2007 with a five year-maturity period to raise capital for closing its loan requirements and investments for capacity expansion. After some conversions and buybacks by the company, the current outstanding FCCBs is at $117 million.