Seeking SBI's help to defer debt repayment: Orchid

Orchid Chemicals has approached State Bank of India (SBI) to restructure its debt worth USD 300 million, says K Raghavendra Rao, chairman and managing director, Orchid.

In an interview to CNBC-TV18, Rao adds that most of the money received from Hospira's acquisition of Orchid's active pharmaceutical ingredient (API) manufacturing facilities will be used for repaying a part of the debt.

The company has approached the lead of the bank's consortium for the restructuring of the loan."We are asking for a postponement of the payment of the debt to the bank by talking to the consortium of bank. So, we would be looking to postpone some of the repayments and the dues that would be coming up in the next few quarters," adds Rao.

Below is an edited transcript of Rao's interview to CNBC-TV18.

Q: Walk us through what exactly this debt recast plan is and how much of your debt goes into some kind of restructuring?

A: We are doing the deal with Hospira for one of our assets being sold for about USD 200 million. Most part of that will go for repayment of debt. But after that also we are left with around USD 300 million of debt. So, we are looking for rescheduling a part of that debt, which is due for repayment in the near future, so that the company can run better post deal.

Q: What kind of terms of reschedulement are you looking for and have you reached out to your banks already, I know that you have got an 'no objection certificate' (NOC) with regards to that asset sale that you were talking about but on this have you received any word from them?

A: It is too early to say what kind of a reschedulement we are talking about. We have gone to State Bank of India (SBI) to help us in restructuring of balance debt. Most part of this USD 200 million from the deal, for which NOC has been given by the bank, will be going for repayment of debt. So, it is a combination of deal money going for debt repayment and balance debt being recashed.

Q: By restructuring do you mean an extension though because you are already suffering from extremely high interest cost?

A: By restructuring, I mean postponement of the payment of the debt to the bank by talking to the consortium of bank. So, we would be looking to postpone some of the repayments and the dues that would be coming up in the next few quarters.

Q: Who are your key bankers at this point in order of who has the highest exposure with you versus who has the least?

A: SBI has the highest exposure and they are leading this restructuring programme.