Orchid Pharma gets NOC to complete $200 mn sale with Hospira

Company expects to conclude the deal by end of the month

Chennai-based Orchid Chemicals and Pharmaceuticals Ltd has received all the no objection certificates (NOCs) from the lenders to complete its $200 million (around Rs 1,135 crore as per the current currency rate) deal with US-based Hospira Inc, said a senior management official. The company expects to conclude the deal within the end of this month.

According to earlier reports, the deal has been delayed even as IDBI Bank approached the court with a dispute related to conversion of part of its money lended to the company to equity. It was announced in August 2012, that Hospira would acquire Orchid's active pharmaceutical ingredient (API) manufacturing facility in Aurangabad, Maharashtra, and an associated research and development (R&D) facility in Chennai for around $200 million.

The company, which has earlier announced closure of the deal within March 31, 2013, later said that it has extended the Business Transfer Agreement (BTA) with Hospira till June 30, 2013 and a company spokersperson said that the extension was since the closing conditions were not met.

“We have received all the NOCs and we are expecting the deal to be through within the end of this month,” said R Raghavendra Rao, chairman and managing director of Orchid Chemicals and Pharmaceuticals Ltd. He was speaking to the reporters in the sidelines of a conference on board governance organised by the Tamil Nadu Chapter of Institute of Directors and FICCI.

With the money from the deal coming in, the company expects to repay around Rs 800 crore debt out of the total of around Rs 2,200 crore, he added. Rao, who is the promoter of the company, said that he would reduce the pledged part of the promoter's share holding from 70% of his shareholding to 50% within a quarter.

Besides, he said, the company would continue with its plans to enter new therapeutic segments including oncology, ophthalmology and immunosuppressants, as announced earlier.

As reported earlier, the dispute between the IDBI Bank and the company started after the Bank issued a notice of conversion of part of its lending to Orchid Pharma into equity. The Bank has sought the company to meet the conditions stated in its loan agreement before selling the business.

Orchid Pharma opposed the Bank's move to convert part of the lending into equity through a writ petition with the High Court pleading an order against the move. IDBI has also filed a suit with the Court related to the issue. Meanwhile, the company also started discussion with the Bank to settle the issue.