Wockhardt to clear bond dues by Aug; Danone deal on track

The Bombay High Court today directed the debt-laden pharma company Wockhardt to clear all dues to its bondholders by August next year and allowed the sale of its nutrition business to French foods major Danone.

Wockhardt has agreed to pay Rs 315 crore by August 2012 as the rest is already deposited with the court. The firm owes foreign bond holders Rs 417 crore, which includes interest and redemption premium.

The court also allowed the recent sale of Wockhardt's nutrition business to Danone with a caveat that it clears the dues to the bond holders without any delays.

Under the HC-set timeline, Wockhardt, that has already deposited Rs 115 crore with the court as security, will have to pay Rs 85 crore by December, Rs 30 crore by January, Rs 100 crore by March, and Rs 50 crore each in June and August 2012.

The HC asked the drug firm to give an undertaking, within two weeks, to deposit amounts as per the timeline. The amount deposited with the court will eventually go to the bondholders. It further said if the city-based drug firm misses even one payment, their appeal stands invalid.

The HC was hearing a winding-up petition filed by a group of foreign-currency convertible bond (FCCB) holders, led by Singapore-based hedge fund QVT Financial and an overseas unit of rival drugmaker Sun Pharma, after Wockhardt defaulted on redemption of USD 110 million in October 2009.

After Wockhardt files an undertaking regarding the prescribed timeline of repayment, it will have the liberty to sell its nutrition business to Danone, the HC said. The firm recently sold its nutrition business for USD 356 million.

The court's approval is subject to the condition that Wockhardt clears its dues. Wockhardt's stock surged after the verdict. The stock gained 11.59% at Rs 448.10 on BSE and 11.53% at Rs 449 on NSE.