Sun Pharma opposes Wockhardt deal

MUMBAI: In a move that has sparked off speculation about its motive, Mumbai-based Sun Pharmaceutical has challenged the settlement between Wockhardt and some of its creditors. At a time when Wockhardt is about to strike a deal with several offshore creditors, Sun Pharma has stepped in, claiming that it holds close to 20% of the foreign currency convertible bonds ( FCCBs) that Wockhardt had issued to raise $110 million.

The development, which has come as a nasty surprise to Wockhardt, may delay the new agreement the company was planning to enter with some of the other FCCB investors. Sun Pharma insists that it’s “purely a financial investment by Sun Pharma Global” —a Sun Pharma subsidiary that has been holding the bonds “for a long time” . “We are not interested in acquiring Wockhardt or any of its assets,” said a Sun Pharma spokesperson . According to the person, “several lenders, including a public sector bank, are opposing the inadequate settlement terms” .

However, a Wockhardt spokesperson said most of the investors are backing the settlement proposed by the company. Wockhardt has been negotiating with a section of FCCB investors, led by US-based investor fund QVT, for many months to improve the terms of settlement. These investors had filed a winding-up petition in the Bombay High Court against Wockhardt.

After months of negotiations with the creditors, which included foreign banks that sold derivatives to the drugmaker, the Wockhardt board recently cleared a preferential issue of up to $400 million and fresh issue of FCCBs up to $74 million . Sun Pharma has filed an intervention application to challenge the settlement, which would have caused QVT and its trustee to withdraw the winding-up petition.