Shares of Panacea Biotec surged 17 per cent to Rs 213 on the BSE on Tuesday after the pharmaceutical and biotechnology company said that India Resurgence Fund (IndiaRF), a fund promoted by Piramal Enterprises and Bain Capital Credit, has invested Rs 992 crore ($144 million) in the company.
The deal will help Panacea, which has been under corporate debt restructuring (CDR) since 2014, retire debt of close to Rs 731 crore as on March 31, 2018, and pump in capital to grow business.
Panacea Biotec said the investment proceeds will be used for a one-time settlement with existing lenders, general working capital and growth requirements of the company.
This investment is structured by way of non-convertible debentures (NCDs) of up to Rs 864 crore and subscription amount of Rs 32 crore towards share warrants to be allotted on a preferential basis, the company said in a BSE filing.
The subscription amount represents 25 per cent of total amount of Rs 128 crore proposed to be raised upon issuance of equity shares against warrants as per Sebi regulations, 2018, the statement said. Subject to exercise of warrants, IndiaRF along with its affiliates will collectively end up owning 10.4 per cent stake in the company on a fully diluted basis, it added.
The purpose of this investment is to not only restructure the company's balance sheet, but more importantly, work closely with the promoters and management team, to drive rapid revenue growth and sustainable profitability improvement, said Shantanu Nalavadi, Managing Director, IndiaRF.
In the past one year, the stock of Panacea Biotec has underperformed the market by falling 36 per cent, as compared to a 16 per cent rise in the S&P BSE Sensex.
At 09:32 am, Panacea Biotec was trading 14 per cent higher at Rs 207 on the BSE, as compared to a marginal 0.01 per cent fall in the benchmark S&P BSE Sensex. The trading volumes on the counter nearly doubled as a combined 602,074 shares changed hands on the BSE and NSE, till the time of writing this report.