Pharmaceuticals and Healthcare
Case Outline
- Experts in chemical synthesis, fermentation and enzymatic technologies besides owning two US FDA approved facilities and producing anti-asthmatic, anti-Cholesterol etc under contract manufacturing
- Negative EBITDA due to sudden fall in revenues owing to change in US Regulations
- Increase in power cost due to turbine failure in Company’s plant
- Buying sugar plants as backward integration backfired as state Govt suddenly changed the policy
- Company had already gone through restructuring twice
- Lenders revoked the Scheme granted and initiated proceedings to take possession of assets
Issue
- Protection of the Going Concern Value (GCV) of the company particularly, various international regulatory approvals such as the USFDA, EDQM, etc
- Mechanism to fund mounting labour, and statutory dues.
- Provide an acceptable exit route to the lenders
- Promoters being technocrats, needed support in business acumen
Normal Solution
- Slump sale of assets would have fetched very low value to pay off the debt leading to no value realization for the promoters and sub-optimal recovery for the banks
- Buyer worried about the contingent and statutory liabilities.
Brescon Value Add
- Front-ended the process of One-Time Settlement(OTS) with seven banks at levels, fair to both the promoters and the lenders.
- Arranged for induction of a credible strategic investor with significant minority stake on board, because of long standing relationships
- Investment from Brescon to part fund the OTS
Impact
- Company could recommence operations
- Preserved the business value by protection of regulatory approvals
- Access to plant ready for supply, saving time required in construction and obtaining fresh approvals.
- Derisking and optimisation of recovery for the lenders in an Account / asset that was at the brink of being written off.
- Increase in market capitalization by more than 6x in 2 years time
