Orchid redeems $168-m FCCBs, to get interest benefits

Written by R Ravichandran | Chennai | Updated: Feb 29 2012, 05:30am hrs
Orchid Chemicals & Pharmaceuticals (Orchid Pharma) has on Tuesday announced that it has redeemed the outstanding foreign currency convertible bonds (FCCBs), including yield-to-maturity, aggregating to $167.64 million on February 28, 2012. These bonds were issued in February 2007 for $175 million.

Orchid had in December raised $97 million through ECB route and is said to have utilised the entire funds towards redeeming the last FCCB issue of $167.64 million, including utilising funds raised through internal accruals, thereby saving substantial amount on interest costs.

When contacted, Orchid head of investor relations Ch Ram, said: By retiring this final FCCB, our overall debt levels have come down to an extent on account of internal cash generation. We will be benefiting proportionately to the extent of internal cash generations to retire this FCCB issue. However, he declined to comment on the exact savings.

To a question, he said, There is no more pending FCCB issues for us. The first FCCB, which was issued way back in 2005 for $43 million, was redeemed in 2010 for $17 million with yield to maturity rates. This amount was after promoters buy back of some portion and partly conversion of some investors. The second one was issued in 2007 for $175 million and was fully redeemed today, including yield to maturity of 7.2%.

Having raised only $97 million through ECB, the company has to substantially utilise its internal cash generation (around $70 million) to retire this FCCB issue. The ECB provides us more beneficial than FCCB issues in terms of interest costs as well as tenure, which will reflect in our balance sheet.

According to him, the company is on strong growth path and hope to do end the financial year with a decent growth rates.