Biocon Biologics refinances $1.1 bn debt through bonds, syndicated facility

Refinancing will improve liquidity and help in reinvestment, says company

Biocon Biologics, a subsidiary of Biocon, on Thursday said that it has refinanced $1.1 billion (Rs 9,300 crore) long-term debt through US dollar bonds and new syndicated facility which includes $800 million (Rs 6,600 crore) senior secured notes due 2029 at a coupon of 6.67 per cent.

Biocon Biologics (BBL) has a debt of $1.2 billion to fund the acquisition of Viatris' biosimilars business.

Speaking to Business Standard, Kedar Upadhye, CFO of Biocon Biologics said the company now has access to the international capital market and this provides them with a lot of financial flexibility.

“It improves our liquidity, profile, and obviously a little bit of a savings in the interest rate as well,” he said.

“We were supposed to repay $250 million next year. Now that is payable only at the end of five years from now. Deferral of maturities is a significant reason why the liquidity profile improves. Also, there is about a 30 basis point improvement in the coupon rate,” Upadhye explained further.

He clarified that they don’t have any major investment programme from here on. The R&D expenditure will continue at 7-8 per cent of revenue level, and annual capex would be around $80-100 million or so.

Biocon Biologics has not ruled out going for an IPO eventually.

“Options to raise equity are many and we will pursue it after assessing the pros and cons of each of them. So an IPO will help us get there or any other avenues. At this stage we are not making any definitive statement with what route we will bring the equity in,” Upadhye said.

“An improved liquidity profile gives confidence for anybody to come in, or whether an IPO. So chances of getting a good deal improve hereafter,” he added.

Additionally, Biocon Biologics has entered into a commitment agreement for a new syndicated debt facility. The proceeds of the bonds, together with the new syndicated debt facility being raised, will be used to substantially refinance existing debt of $1.1 billion, the company said.

Shreehas Tambe, CEO and managing director, Biocon Biologics, said, “This strategic refinancing underscores our commitment to enhance financial flexibility, fuels Biocon Biologics’ long-term growth and is core to the consolidation phase of our business. We expect this transaction to strengthen our capital structure and allow us to redeploy investments into the business, including advancing our differentiated pipeline of biosimilars. It will also enable us to diversify our investor base to include marquee global funds and healthcare investors who seek to participate in Biocon Biologics’ growth story.”

The bonds will be issued by Biocon Biologics Global plc which is a wholly-owned subsidiary of BBL and will be backed by a strong security package, the company said. The bonds are expected to be rated BB by both S&P and Fitch and will be listed on the Singapore Stock Exchange.

The transaction is expected to settle on October 9, 2024, subject to customary closing conditions.