Birla Sun Life Mutual to honour Wockhardt investment

MUMBAI: Birla Sun Life Mutual is expected to once again step in to honour the investments it made in ailing biopharma company, Wockhardt, for its debt fund that is all set to mature on Wednesday. The mutual fund company, on May 5, moved in to make good on its first offering, which also had exposure to Wockhardt. The company has an overall exposure of Rs 79.8 crore to Wockhardt���s debt papers, which are currently not being honoured since the company has approached the Corporate Debt Restructuring Cell (CDRC).

Birla Sun Life Fixed Term Plan (FTP) ���Series AM Ret���, which matures on Wednesday, has an exposure of Rs 10.95 crore to Wockhardt���s debt papers. The company���s third fund ���Series AV Ret��� has the largest exposure of the three funds at Rs 42.72 crore and is due to mature on June 2. A fixed term plan-series is a close-ended scheme that invests in fixed-income securities.

���We have been in touch with the company,��� said an official at the fund house, who requested anonymity. ���Although, the company is still solvent, it may not be in a position to honour its obligations. However, we have decided to help repay the fixed maturity plans (FMPs) through internal funds,��� he said.

Birla Sun Life Saving Ret also has exposure of almost Rs 5.5 crore to Wockhardt debt papers bringing the total exposure of the company to almost Rs 85.32 crore. Wockhardt though does not appear to be in a position to honour its debt-papers in the near future. The company���s promoters, who were looking to raise funds from the public to finance their aggressive growth strategy, pledged 40% of their shares with IL&FS for Rs 350 crore.

They also borrowed aggressively in foreign currency to fund their acquisitions abroad, which included Pinewood in Ireland, Negma in France and GmbH in Germany. It has external commercial borrowings (ECBs) worth $250 million and did leveraged buyout (LBO) financing worth approximately $200 million.

The rest of the company���s Rs 3400-crore debt is domestic debt, which was raised for working capital and day-to-day operations. The promoters are under severe pressure to raise funds, as their foreign currency convertible bonds (FCCBs) of almost $110 million are due for redemption in October this year.