Debt-ridden Orchid Chemicals & Pharmaceuticals has announced that the Corporate Debt Restructuring (CDR) cell has approved a debt restructuring package for the company. The company informed the stock exchanges that its board, which met late on Friday, has approved the CDR package.
As per the CDR scheme, the company has got approval for its decision to sell and transfer its penicillin and penems (including carbapenems) API business, together with its manufacturing facilities at Aurangabad and its associated research and development facility at Sholinganallur near Chennai, to US-based Hospira.
Orchid entered into an agreement with Hospira in 2012 to sell these facilities for a consideration of $200 million. However, it could not complete the deal due to objections raised by banks and financial institutions, and finally referred it to CDR last year.
Some other features of the CDR package include repayment of (Rs 681 crore) a portion of the total debt to lenders out of the sale proceeds and restructuring of the balance debt (Rs 2,866 crore). The interest funding for the first two years from the cut-off-date (April 1, 2013) for interest on term debts and one year for interest on working capital borrowings will be paid by the company.
Orchid will have to carve out a portion of sale proceeds for meeting the working capital requirements. The restructured debt, together with funded loans, would have to be repaid over a period of eight years, starting April 2015, subject to regulatory approvals.
The restructuring process would be implemented by an appointed monitoring committee of CDR lenders.
Welcoming the CDR package, K Raghavendra Rao, chairman and managing director, Orchid, said: “With this the company would be on a better platform to achieve improved performance going forward.” FE
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