Aurobindo Pharma's preferential issue at hefty premium

HYDERABAD OCT. 13. The board of Aurobindo Pharma has recommended a preferential issue of up to 3.80 million equity shares/share warrants aggregating Rs. 229.52 crores.

The equity shares/share warrants carry entitlement to subscribe to equity shares at a price of Rs. 604 per share of Rs.10 nominal value (inclusive of premium Rs.594 per share).

The company plans to use the proceeds of the preferential issue for funding future research and development activities, potential acquisitions, working capital requirements, repayments of high cost debts and general corporate purposes. The preferential offer is being made to Citicorp Banking Corporation (1.65 million equity shares), ChrysCapital II LLC (9 lakhs shares), and Ramprasad Reddy (Chairman of Aurobindo) 1.25 million shares.

The investment of Citicorp Banking Corporation, Bahrain, will constitute up to 5.89 per cent of the company's fully diluted post issue equity. This is an investment vehicle for funds managed by CVC International U.K. The investment by ChrysCapital II.LLC, Mauritius, (private equity fund) will constitute up to 3.21 per cent of the post issue equity.

The shareholding of Ramprasad Reddy, a promoter and Chairman of the company will change from 28.31 per cent to 28.93 per cent of the fully diluted post-issue equity. The collective holding of the promoters and persons acting in concert will come down from 59.95 per cent to 56.28 per cent of the fully diluted post-issue equity.

The equity base of the company will increase up to Rs.28 crores, which amounts to an increase of 15.70 per cent over the existing capital base of Rs.24.20 crores.

The company maintained that the price of Rs. 604 was in accordance with the SBEI guidelines for preferential issues The company has convened an emergency general meeting of shareholders on November 5 to seek their approval.

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