Bombay HC rejects plea to block Wockhardt deal with Abbott
18 January 2010
Troubled healthcare company Wockhardt Ltd's efforts to restructure its operations got a fillip on Saturday with the Bombay high court declining to grant an injunction sought by a section of Wockhardt investors to stall the sale of its nutrition business to Abbott Laboratories of the US.
The petition was filed in the high court by a group of investors holding 40 per cent of Wockhardt's foreign currency convertible bonds. It sought to block the Indian drug maker's asset divestment plan. The Rs625-crore deal, announced last July, was a part of Wockhardt's efforts to get out of non-core activities and focus on pharmaceuticals.
The Bombay high court, which on Friday heard a petition from New York-based QVT Financial, leading the opposition shareholders, for admitting a winding up petition against Wockhardt for defaulting payment of foreign currency convertible bonds, did not grant the demand for stalling the deal with Abbot.
A group of investors led by QVT Financial had approached the Bombay High Court a few weeks ago, demanding winding up of the company for paying its bondholders only 35 per cent of the FCCB dues. The company had to repay FCCBs worth $110 million, which were due for redemption in October 2009, and external commercial borrowings of $250 million. Investors led by QVT own 40 per cent of these bonds.
The single-judge bench of Justice S J Kathawalla declined to grant an injunction on the sale of any of its assets, including the nutrition business during the pendency of the petition, as demanded by the counsel of QVT.
Wockhardt had earlier reached an out-of-court settlement on a similar winding-up petition with another lender, Singapore-based DBS Bank, which had approached the Bombay high court three months ago over non-payment of the Rs44-crore working capital loan given to Wockhardt in 2007.
The court did not admit the petition and directed the parties to settle the issue. Wockhardt settled the dues at a 19-per cent discount, paying Rs37 crore to DBS.
In July 2009, Wockhardt signed an agreement to divest its non-core nutritional business to Abbott for about Rs625 crore. Earlier, the company had sold off its loss making German subsidiary Esparma to Mova GmbH and animal health division to Vetoquinol of France to mobilise about Rs300 crore.