Mumbai: The founders of Orchid Chemicals & Pharmaceuticals Ltd have the option to convert 5 million warrants to 7.6% of additional equity, founder and managing director, Raghavendra Rao, said on Wednesday, 9 April.
“Yes I have warrants,” Rao told Reuters over the telephone. “That converted into shares will mean 7.6%.” The promoters had paid 10% of the conversion price upfront, he said.
The drugmaker’s shares have risen by a third in two days on news Solrex Pharmaceuticals has raised its stake in Orchid to 11.4%, amid speculation the acquirer was part of larger rival Ranbaxy Laboratories Ltd.
However, there has not been any confirmation from either Ranbaxy or Orchid connecting privately-held Solrex to Ranbaxy.
The warrants, which were allotted last March, are convertible at Rs202.58 each within 18 months of allotment, according to data from the stock exchange.
Rao and his family will have to pay about Rs913 million ($22.8 million) to affect this conversion, but there was no specific idea about how they would raise this amount, he said.
Orchid’s promoters stake dropped by 7.9% to 15.9% last month after lenders to whom the shares were pledged sold them when the owners could not meet the margin calls from the lenders.
The shares, which slumped to a near-four-and-a-half-year low following the sale, have risen, boosted by the Solrex acquisition from the open market.
If Solrex acquires 15% stake in Orchid, under existing rules, it will have to make an open offer for an additional 20% of the company’s shareholding.
Orchid shares on Wednesday were trading 1.7% down at Rs235.90 while Ranbaxy shares were down 0.1% in a flat Mumbai market.