Orchid to raise USD 75 million through FCCBs

20 March 2004

Chennai: The Chennai-based pharma major, Orchid Chemicals and Pharmaceuticals Ltd. (Orchid) has announced that it proposes to raise up to USD 75 million to fund its long-term growth plans. Orchid's board has considered the issue of foreign currency convertible bonds (FCCBs) in the international markets.

The board has decided to increase the authorised share capital of the company from the present Rs 34 crores (3.4 crore equity shares of Rs 10 each) to Rs 45 crores (4.5 crore equity shares of Rs 10 each).

The board has also considered allotment of 2 million warrants convertible into equity shares to the promoters based on SEBI regulations. This would enable the promoters retain their shareholding percentage even after conversion of the bonds into equity. The warrants will have a lock-in period of 3 years from the date of allotment. Accordingly the company has scheduled an Extraordinary General Meeting on April 10, 2004 to get the approval of its shareholders for the proposals.

The proceeds will be utilised by the company to further diversify and strengthen its foray into the US generics and other regulated markets. Additionally, the company will be establishing new USFDA compliant infrastructure to develop and manufacture drugs in diverse therapeutic groups, with emphasis on non-penicillin, non-cephalosporin products.

Over the last few years, Orchid has initiated a strategic transformation into the more lucrative regulated markets of US and Europe. In line with this strategy, the company has commissioned several new manufacturing blocks and also upgraded existing infrastructure to comply with USFDA and other regulatory standards.

Orchid had earlier implemented an investment strategy involving participation from Schroder Ventures & International Finance Corporation, under which USFDA compliant facilities have been established for cephalosporin bulk drugs and formulations.