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Orchid gets $100 mn ECB to redeem bonds

20 Dec 2011 Evaluate

Orchid Chemicals and Pharmaceuticals Ltd(OCPL) has found a way to redeem its outstanding foreign currency convertiblebonds (FCCBs) pegged at $117 million (around Rs 621.9 crore) ahead of their duein February 2012. A consortium of Indian banks has sanctioned the drug major$100 million (around Rs 531.5 crore) by way of external commercial borrowings(ECBs). The ECBs, along with the internal accruals, would support the companyto redeem the outstanding FCCBs along with the yield-to-maturity coming in lessthan ten weeks from now. The total redemption value is $167 million (around Rs887.6 crore).

With over 85 per cent of the company’s salescoming from exports billed in US dollar, it has a natural hedge against currencyfluctuations. The depreciation of rupee would support the company to utiliseits internal accruals to fund the rest of the amount for redeeming theoutstanding FCCBs. The company had floated zero coupon FCCBs worth $175 millionin February 2007 with a five year-maturity period to raise capital for closingits loan requirements and investments for capacity expansion. After some conversionsand buybacks by the company, the current outstanding FCCBs are at $117 million.

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