Orchid to repay Rs 1,200-cr debt with sale proceeds

Orchid Chemicals and Pharmaceuticals today said it will use the $400-million, garnered from selling its generic injectables business to the US drug firm Hospira, to retire the debts and in developing new products.

"We would use the money in retiring debts and in developing new products," Orchid managing director K Raghavendra Rao told PTI here today.

Currently, the company has a debt of Rs 1,200 crore besides a liability of $155 million in foreign currency convertible bonds (FCCBs), which are going to mature in 2012. The company also has a tax liability of $20 million.

Rao further said the company will use the money, which it got through the sale in repaying the entire debt and in redemption of the FCCBs, besides settling the tax issue. The remaining amount would be used in developing new products, Rao added.

Orchid signed an agreement with Hospira to sell its generic injectable finished dosage business for more than Rs 1,800 crore ($400 million).

The deal includes the Beta-lactam antibiotics complex facility of Orchid at Irugattukottai near here, Hospira chief operating officer Terry Keamey told reporters after signing the deal here today. The Beta-lactam antibiotics are made by using bacterias as source.

Keamey said the acquisition would help Hospira establish a direct presence in the country.