With refinancing done, focus will now be on debt reduction: Biocon Biologics CFO

The Biocon subsidiary has raised $800 million through bonds due 2029 at a coupon of 6.67%.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Having refinanced debt worth $1.1 billion through a mix of offshore bonds and term loans, Biocon Biologics Limited, the biosimilars subsidiary of Biocon Limited, will now shift its focus towards paring the debt on its balance sheet, a senior executive of the company told Moneycontrol.com.

The refinancing will help Biocon Biologics repay the money it had borrowed to buy the global biosimilars portfolio of the US-based Viatris Inc for over $3 billion in 2022, the moratorium on which was ending soon. The Biocon subsidiary has raised $800 million through bonds due 2029 at a coupon of 6.67 percent. Additionally, Biocon Biologics has entered into a commitment agreement for a new syndicated debt facility. The proceeds of the bonds, together with the new syndicated debt facility being raised, will be used to substantially refinance existing debt of $1.1 billion (Rs 9,346.8 crore).

“The reason we decided to raise funds now is that it enables us to pursue several other strategic initiatives. This is the first step. The next step is debt reduction, and we have multiple options for that. We'll choose the best approach after evaluating the pros and cons of each. But without completing this initial step, the other options wouldn’t have been available,” said Kedar Upadhye, chief financial officer, Biocon Biologics.

“Now that we've deferred maturities by five years with a bullet repayment on the $800 million, we have the flexibility to address other aspects of our capital structure," he added.

According to Upadhye, the net debt for the Biologics division stands at approximately $1.3 billion, excluding any structured instruments. Out of that, $200 million is working capital, which is part of a revolving credit facility that renews annually. The remaining $1.1 billion has been successfully refinanced, leading to an improvement in our liquidity profile, he said.

The total book size for the $800-million bond issuance was about $2.5 billion, meaning the issue was subscribed three times over. Geographically, the issue received subscriptions from across the global with 47 percent demand from the US, 27 percent from Europe and the Middle East, and 26 percent from Asia.

Upadhye added that from a timing perspective, while the bond issuance was done very early into an interest rate cycle that has just started to move downwards (with the US Federal Reserve cutting rates by 50 basis points), the structure of the fundraise through fixed coupon bonds and variable rate term loan allows the company the flexibility to take advantage of future interest rate cuts.

“There's consensus that further rate cuts may follow, though we haven’t seen them yet. If those cuts do occur, we’ll leverage them through the term loan side. We have two components here: the bonds and a new syndicated term loan facility. The term loan has a flexible, variable interest rate, allowing us to benefit from potential rate reductions. We’ll also explore interest rate swaps for the bonds to optimise costs,” the Biocon Biologics CFO said.

Commenting on the debt reduction plans, Upadhye said that the company will evaluate multiple options including an initial public offering, but has not yet decided on any one route.

“We have several avenues we can explore, and we’ll move forward when we feel confident that we can secure favourable terms—whether that’s getting a good deal, raising finance at a cost we're comfortable with, or ensuring the right commercial terms and security packages. We’ll evaluate all these factors before activating any specific option,” he said.

“The key point is that we have multiple alternatives, so we're not locked into just one path. Whether it’s an IPO or another form of capital raise, we’ll carefully assess the situation and take action when the time is right," the CFO added.