Mumbai-based pharma major Wockhardt has announced a major organisational change and admitted that it was facing problems in servicing its debt. Its chairman and managing director, Habil Khorakiwala, has stepped down as MD to make way for his younger son while the company has decided to approach the corporate debt restructuring (CDR) cell through its lead banker in the wake of mounting debt.
In a statement to BSE issued after market hours, Wockhardt said its board had decided to approach the CDR cell of ICICI Bank due to “adverse market conditions, liquidity constraints and debt burden”.
Several bankers said that Wockhardt faced some difficult quarters. The company’s market capitalisation of Rs 936 core is tiny compared to its debt burden of over Rs 3,000 crore. There is also intense speculation that the company has incurred substantial mark-to-market (m-t-m) losses as bets on forex derivatives have gone wrong. The upshot, the bankers said, is that India’s seventhlargest pharma company by revenues will need substantial infusion of equity by selling subsidiaries and assets or even inducting a strategic partner in the parent company.
Wockhardt’s debt stood at Rs 3,777 crore as of December 31, according to rating agency Crisil. The company would have to repay Rs 2,370 crore in two years, with about Rs 1,324 crore coming up for repayment in calendar 2009.
Unconfirmed reports had earlier suggested that French pharma major Sanofi-Aventis has had preliminary talks with the promoters of Wockhardt for a possible buyout.
In the statement issued, which was sparse in details, the board said it had approved the appointment of Murtaza H Khorakiwala as MD while Habil Khorakiwala would continue as executive chairman. Huzaifa Khorakiwala, the elder son, has been appointed as wholetime director with immediate effect. Murtaza and Huzaifa were appointed as executive directors three years ago. The new appointments will be ratified at an annual general meeting.
The company also said it could not furnish the audited financial results for the year ended December 31, 2008, as the statutory audit could not be completed because of the “potential restructuring of certain businesses of the company and its subsidiaries”.
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