A major war has broken out between Habil Khorakiwala-led pharma firm Wockhardt and its lenders. Wockhardt, which has defaulted on its Rs 680-crore ($140 million) foreign currency convertible bonds (FCCBs) is learnt to have offered just half of this amount to settle the debt.
US-based investor fund QVT Advisors, which holds 41% of FCCBs, has rejected the offer and in turn offered to redesign the FCCBs for the next five years with a rider that it would get at least 26% stake in the company post-conversion.
If Wockhardt does not accept the offer, QVT is likely to file for the company?s liquidation in the US, UK and several other European countries, people close to the development told FE.
It is learnt that QVT has also threatened to block the sale of Wockhardt?s nutrition business to US firm Abbott, as the Indian pharma firm would need lender approval before the final transfer of assets to Abbott. Last year, Abbott announced that it had signed a definitive agreement to acquire the nutrition businesses of Wockhardt Ltd, along with Carol Info Services Ltd and certain Wockhardt subsidiaries and group companies for a total consideration of $130 million in cash.
When contacted, a Wockhardt spokesperson declined to comment on the issue, saying the matter is sub-judice. Wockhardt, which has a debt of over Rs 3,700 crore, had undertaken a corporate debt restructuring programme last year.
A QVT spokesman told FE, ?The current restructuring proposal offered by Wockhardt is totally unacceptable to the bondholders led by QVT?.
However, he refused to reveal QVT?s future course of action.
Under the restructuring programme, Wockhardt had offered to settle repayment of $110-million FCCBs, issued by it in 2004, at a discount. According to the FCCB agreement, Wockhardt was to offer its lenders a stake in the company at a price of Rs 540 per share. Since the company?s shares are now trading at a far lower price of around Rs 180, it doesn?t make sense for the lenders to buy the stake. Therefore, they have offered to restructure the FCCBs and convert them into equities after five years at 10% premium over the existing price. But this is apparently not acceptable to Wockhardt.
If Wockhardt allows lenders to buy stakes in the company, the prompter stake will effectively come down from the existing 73% to 54%.
The group of bondholders led by QVT had refused to undertake the offer and has filed a winding up petition in the Bombay High Court and has now decided to file similar petitions in other countries seeking liquidation of the group?s assets in these regions for debt repayment.
?QVT Advisers is filing winding up petitions in the US, the UK and other countries against the Wockhardt group following the default in redemption of FCCB payments by the Indian firm,? another person familiar with the developments said.
Wockhardt has already sold its hospital business to Fortis Hospitals Ltd, a subsidiary of Fortis Healthcare Ltd. Fortis has completed the acquisition of the greenfield hospital division of Wockhardt Hospitals. Fortis had acquired 10 hospitals from Wockhardt for Rs 909 crore in August this year.