Morepen Laboratories CDR proposal approved

Morepen Laboratories Ltd has announced that Morepen´s Corporate Debt Restructuring (CDR) proposal of Rs 7500 million involving more than 30 Banks, has been approved by the Empowered Group of the CDR at its meeting held last week.

The Company debt was finally restructured by a super majority of lenders (82.48%) by value and 66.67% by number who were agreeable for OTS / Restructuring. A majority of the Lenders (75%) have opted for a One Time Settlement (OTS), whereas nearly 25% of the Lenders have agreed for restructuring of the Debt over a period of 10 years.

The OTS proposal envisages cash payments of 25% to the Secured Lenders, 15% to Unsecured Lenders, and 20% to Working Capital Bankers. The total amount to be paid in cash in the OTS category would be to the tune of Rs 1350 million. In the restructuring category, 45% of the total debt would be interest bearing and balance 45% would be bearing a zero coupon which would be repaid in 9th and 10th year. The residual serviceable debt would come down to less than Rs 1000 million.

As a part of restructuring, the Company shall convert 5% of outstanding loan into equity shares to the Secured Lenders. The Company shall convert 10% of the outstanding loans into 0.01% Preference Shares, which will be converted at the option of the Preference share holders, into equity shares at the end of the 7th year. The equity shares to be so issued shall be at a price determined in accordance with the SEBI pricing formula.

It was also decided that the cut-off date for restructuring shall be July 01, 2006. All interest and other charges up to June 30, 2006 would be waived and for residual restructured debt 8.25% interest would be applicable from July, 2006. Shri Sushil Suri, Chairman & Managing Director of the company mentioned that OTS proposal was finalized after considering the debt which the company could sustain and the amount which the strategic investor would be investing in the company.

He also stated that the Company has reached an advanced stage of negotiations with a Group of Investors for bringing in the required additional capital. Shri Suri said that the company has achieved a major milestone in its journey towards complete revival, a move, which would go a long way in satisfying the aspirations of its various stakeholders. The operations of the company had shown remarkable improvement, as a result of which it has emerged cash positive at EBIDTA levels during the last four quarters and is looking well poised to a more promising performance in the future. IDBI´s Stressed Asset Stabilisation Fund has acted as Lead Sponsor to the restructuring proposal and Avista Corporate Finance Advisory was the Advisor to the transaction.

As a next step, the company proposes to shortly move the Hon´ble High Court at Shimla to make a settlement with FD holders and other small creditors.

Source : Equity Bulls

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