Plethico Pharmaceuticals is believed to have mandated Elara Capital for restructuring its $75 million outstanding convertible bonds due in October.
Elara Capital, has been mandated to restructure the outstanding foreign currency convertible bonds, due in October this year, according to market sources familiar with the situation.
In October 16, 2007, the company had raised $75 million by issue of FCCBs, which are due for maturity in October this year.
The restructuring options being talked about are in the preliminary stages and may include a cash component and a new bond issue, investment banking source said. The company officials could not be reached for comments.
The company’s total debt pile, including secured loans and unsecured loans, as on December 2011 stands at Rs 1091.5 crore, almost double from Rs 581.05 crore as on December 2010, according to the company’s annual report.
FCCBs are a type of convertible bond issued in a foreign currency. It is a mix between a debt and equity instrument. Investors in this case have the option to convert their holdings into equity.
However, if the share price does not touch the conversion price promised by the issuer, the issuer needs to treat the bonds as debt.
While announcing the FCCB issue, the company in a regulatory filing in October 2007, had said that the bonds are convertible into equity shares at a premium of 35 per cent over the reference share price of Rs 447.95.
Shares of the company are at present hovering around Rs 250, way lower than the set conversion price.
Moreover, on August 27, the scrip touched a 52-week low of Rs 156.40 and particularly in the last week of August, the stock witnessed strong selling pressure.
In the month of August, the scrip has tanked more than 26 per cent, significantly under performing the BSE healthcare index which settled with gains of 3.59 per cent last month.
Meanwhile, Credit ratings agency Fitch, in a report titled ‘Indian FCCB Redemption in 2012: Quantifying the Problem’, in February this year had noted that about one-fifth of the $7 billion worth FCCBs issued by Indian companies that are due for redemption in 2012 have an “extremely high likelihood” of default.
The report that analysed 59 companies whose FCCBs are due for redemption in 2012, also said that another 17 per cent of the FCCBs due this year are likely to undergo restructuring.