Wockhardt, India's sixth largest pharmaceutical firm has
recently announced that it is encountering severe problems in
servicing its mounting debt. An indiscriminate acquisitions spree and
an imprudent raising of funds through Foreign Currency Convertible
Bonds (FCCBs) in the last couple of years have put the Mumbai-based
pharma company in a fix. To stave off the crisis, the company has adopted
a gamut of measures, including a major organizational shuffle, and it
has also approached the Corporate Debt Restructuring (CDR) cell through
its lead banker to restructure its burgeoning debts and liabilities.
This move is expected to help the company get lower interest rates and
a longer payment schedule to pay off its debt.
In fact, Wockhardt has had some arduous quarters. The company has
accumulated huge debt burden of around
Rs 3,400 cr at a time when its market capitalization is around Rs 936 cr.
Now it would have to repay Rs 2,370 cr in two years, with about Rs 1,324 cr coming
up for repayment in the calendar year 2009. Moreover, speculations are
rife that the company has incurred huge mark-to-market losses, as the bets
on forex derivatives went wrong. All these have put Wockhardt in a deep crisis
and the outcome is that it would now require substantial infusion of equity by
selling subsidiaries, assets, or even by inducting strategic partners in its different
divisions. According to market grapevine, French pharma major Sanofi
Aventis has had preliminary talks with the promoters of Wockhardt for a
possible buyout. The Wockhardt board had also approved the appointment of
Murtaza H Khorakiwala, the younger son of Habil Khorakiwala, as MD,
while Habil Khorakiwala would continue as executive chairman.
Huzaifa Khorakiwala, the older son, has been appointed as whole-time director
with immediate effect. Murtaza and Huzaifa were appointed as
Executive Directors three years ago. Moreover, it is also anticipated that
Wockhardt Hospital, a wholly-owned unlisted subsidiary, may be the first to be hived
off. Other businesses such as Pinewood Laboratories and Negma
Laboratories, some real estate assets and its
animal healthcare businesses are also likely to be hived off. Even it has been
reported that Fortis is close to acquiring 74% stake in Wockhardt Hospital for
nearly Rs 750 cr. Wockhardt is also planning to hive off its biotechnology products
division into a separate company and rope in a global pharmaceutical
major as a strategic investor. |
