Mumbai: Drug maker Wockhardt Ltd on Wednesday said it plans to raise its authorized capital by Rs750 crore by issuing 1.5 billion preferential shares at Rs5 each.
The Mumbai-based pharmaceutical and biotechnology firm, India’s sixth largest by sales, told the stock exchanges that it is increasing its authorized capital from Rs175 crore to Rs925 crore.
The company did not mention the purpose of raising the money.
Wockhardt’s spokesperson said its existing authorized capital includes 100 million shares that have not yet been issued. Including these, 1.6 billion new shares will now be issued.
This means Wockhardt will raise Rs800 crore through the preferential issue.
It is not known who will buy the new shares, but banks and financial institutions could be picking them up.
Typically, such shares are offered at face value and subscribers get dividends on them if a company makes profit. In that sense, they are different from plain vanilla loans on which banks and institutions earn interest.
These shares could be converted into equities after some time, but the Wockhardt release did not give the details of the conversion procedures.
Wockhardt has been facing a fund crunch due to a variety of reasons—a Rs1,600 crore hit on its foreign currency derivatives, emergency repayment of short-term loans raised through pledge of a substantial portion of promoter’s stake and assets, and redemption due on $110 million (Rs509 crore) worth of foreign currency bonds.
The company had in September said its key lenders have approved a corporate debt restructuring (CDR) to bail it out. Typically, lenders change the conditions and rates of loans and at times even the currency of loans under CDR. The issuance of preferential shares could also be part of a CDR.
Wockhardt had also sold three of its businesses, including its German business and its veterinary and nutritional divisions, to foreign rivals since June. Though the company’s operational revenue remained unaffected during this period, it posted a net loss in the second and third quarters due to high interest and foreign exchange loss.
The company, which is facing a winding up petition threat from some of its foreign currency bondholders, has strong market presence both in the local as well as international markets.
Wockhardt also said on Wednesday that the company’s 17th injectable drug, an off-patent anti-hypertension drug called nicardipine, has been approved by the US regulator. The firm will launch this product in the $200 million US hypertension injectables market immediately.
The company’s shares fell by 1.53% on Wednesday on the Bombay Stock Exchange to close at Rs180.35 apiece even the exchange’s benchmark Sensex index declined marginally by 0.3% to close at 16,998.78 points.