Mumbai: The corporate debt restructuring (CDR) process of drug maker Wockhardt Ltd has come in the way of maturity of Birla Sun Life Fixed Term Plan-Series AL, a close-ended scheme that invested in fixed-income securities.
The scheme, which was due to mature on Tuesday, had an exposure of Rs10.95 crore to IL&FS Trust Co. Ltd-Wockhardt-GE Financial Services’ debt paper. Debt-ridden Wockhardt was the obligator of this paper.
People familiar with the development, who spoke on condition of anonymity, said Wockhardt’s lenders are yet to give approval to honour this debt.
Consequently, Birla Sun Life Asset Management Co. Ltd’s promoters—Aditya Birla Group and Sun Life Financial Services Inc. of Canada—have stepped in to bear the losses to ensure investor obligations are met immediately.
Birla Sun Life has a total exposure of Rs79.80 crore to the Wockhardt debt paper.
Two other schemes will mature on 13 May and 2 June.
“Our proposal for CDR has been admitted by our lending banks. We are in discussion with them for this liability,” a Wockhardt spokesperson said.
Birla Sun Life said it will honour its commitments to investors.
Wockhardt, India’s sixth largest drug maker by sales, referred itself recently to the CDR cell of ICICI Bank Ltd, its main lender.
Such restructuring is done by either converting the interest burden into a fresh loan, giving another loan, lengthening the payment schedule or even reducing interest rates on an existing loan.
Wockhardt had been trying to raise funds to repay some of its debt, including cash loans from banks
Habil Khorakiwala, Wockhardt’s main promoter, has been replaced as managing director by younger son Murtaza Khorakiwala. The senior Khorakiwala was asked to continue as chairman.