The Hindu Business Line : Morepen to offload 15% stake to Avenue Capital

The entire Rs 140 crore being brought in by the company as fresh capital will be utilised for repayment to banks under the Corporate Debt Restructuring scheme.

Our Bureau

New Delhi, Sept. 20

Morepen Laboratories has entered in an agreement to offload 14.99 per cent stake for Rs 77 crore to global investment firm, Avenue Capital Group.

Avenue Capital will subscribe to the equity shares through its subsidiary G L India, Mauritius III Ltd, and will also pick up naked warrants to the extent of 5 per cent bringing in a capital infusion of another Rs 27 crore, said Morepen in a statement.

Debt-ridden Morepen also announced an additional fresh capital inflow from the promoters, which is to be converted into 10 crore equity shares amounting to Rs 60 crore.

How it works

As per the terms of agreement, Avenue Capital through its subsidiary G L India, Mauritius will pay 10 per cent money on subscription and the balance 90 per cent is to be paid within 18 months of signing the term sheet.

Post-subscription of these warrants, the promoter’s stake in the company will stand at 46 per cent, G L India Mauritius (Avenue Capital) will hold 14 per cent and the public holding will be 38 per cent.

The entire Rs 140 crore being brought in by the company as fresh capital will be utilised for repayment to banks under the Corporate Debt Restructuring (CDR) scheme for which a settlement has been arrived at. As a part settlement of debt, the company has already issued Preferential Capital of Rs 103 crore to the banks, which will have an option to be converted into equity after a period of seven years. Post this settlement, the company will not have any pending liabilities towards the banks and will have a serviceable debt of only Rs 72.39 crore.

The company said it will start working on a scheme for settlement with Fixed Deposit Receipt (FDR) holders, soon after it has settled its debts with the banks.