Orchid Pharma promoters to up by stake by 13 %

Company's Board gives nod to issue preferential shares for promoters, who infused Rs 73 crore

Promoters of Chennai-based Orchid Chemicals & Pharmaceuticals Ltd to increase their stake to 45 per cent. Today's company's Board of Directors has approved the issue of shares to Promoters on a preferential basis pursuant to the conditions of CDR package sanctioned to the Company by Corporate Debt Restructuring Cell.

K Raghavendra Rao, Managing Director, Orchid Chemicals & Pharmaceuticals Ltd said over period of time the promoters have infused around Rs 74 crore into the company, against that at the current price the company will issue the shares, which is equivalent to 13 per cent of the shareholding.

Orchid, which has been having high levels of debt since it successfully redeemed its outstanding FCCBs in February 2012, approached the CDR Empowered Group for restructuring its debt profile in June 2013. The approval for the CDR Package was received in March 2014. The company also entered into a Business Transfer Agreement (BTA) with Hospira for the sale and transfer of its Penicillin and Penem API business and the API facility located in Aurangabad (Maharashtra) together with the R&D Centre located in Chennai. This business transfer was added as a part of the restructuring process into the CDR package.

Through the CDR process and the Business Transfer, the company will be able to retire a portion of its overdues and by utilising the balance portion of funds for its working capital needs, restructure the balance debt over a period of 10 years.

Of the total inflow of Rs 1207 crore (Rs 1134 crore from sale proceeds and Rs 73 crore from promoter contribution), the company will retire Rs 681 crore to the banks and after payment of tax of Rs 47 crore the balance of Rs 479 crore will be utilised for working capital and growth needs.