Nirma to acquire Core Healthcare's IV business

AHMEDABAD: Almost eight years after itlanded in debt, thanks to its over-ambitious expansion plans, Ahmedabad-basedCore Healthcare Ltd (CHL) has finally found a buyer for its intravenous (IV)fluids and medical devices business in Nirma Limited. For the FMCG company thiswould mean a foray into unchartered territories ofpharmaceuticals.The deal for the sale of CHL''s assets andliabilities was wrapped up on Thursday evening with a Memorandum ofUnderstanding (MoU) being signed between Nirma and the Asset ReconstructionCompany (India) Ltd (ARCIL), CHL founder Sushil Handa said on Thursday. CHL''sstock, which had been on the rise in the past few days, touched a 52-week highand closed at Rs 16 on both BSE and NSE.ARCIL—a securitisationand reconstruction company—acquired 60 per cent (Rs 380 crore) of CHL''stotal borrowing of Rs 650 crore (principal amount) about a year-and-a-halfago.The sale is, however, subject to approval of 20-odd otherlenders and the Gujarat High Court, and may take about six months tomaterialise. CHL''s creditors included Bank of Baroda, Dena Bank and DeutscheBank, which together have lent around Rs 270 crore to CHL.WhileHanda and ARCIL officials were tight-lipped on the size of the deal and Nirmaofficials were unavailable for comment, a release issued by Nirma stated: "Thecompany has negotiated the acquisition with ARCIL, which awarded theundertakings of CHL at Sachana in Ahmedabad district to Nirma, the highestbidder following its offer dated November 18, 2004."According toNirma, it will carry out a due diligence of CHL''s undertakings over the next onemonth and has fixed November 30, 2004, as the appointed date for the de-mergerof the undertaking from CHL and in due course would approach the High Court ofGujarat with a suitable scheme.ARCIL president and CEO S Khasnobissaid that his organisation would now approach the other lenders for which ajoint meeting of all lenders would be held in a couple of weeks. "In the nextthree months the financial aspects of the sale would be worked out, before Nirmaapproaches GHC for clearance of the scheme of settlement," Khasnobissaid.The breakthrough comes almost one and a half years after ARCILhad been hunting for buyers for the pharmaceutical player, which reacheddizzying heights in 1995 putting promoter Sushil Handa in the top league ofIndian entrepreneurs during the early nineties.Nirma will acquireCHL''s still running IV fluids business (comprising small and large volumeparenterals), medical devices (disposable syringes and needles, IV sets andbags), as well as speciality injectibles (anaesthetics, plasma expanders,transplant medicines). The FMCG player will also acquire CHL''s 1,300employees. ARCIL will also put CHL''s tablets manufacturing facilityat Rajpur near Ahmedabad on sale shortly. "While we have identified an Indianbuyer for the plant, IDBI will look for a buyer for the 20 MW naphtha-basedcaptive power plant as it has been leased to them," Khasnobisexplained.CHL, which had borrowed around Rs 710 crore saw its totaldues go up to over Rs 1200 crore over a period of time. It, however, settled Rs110 crore worth of liabilities, including Rs 65 crore of borrowing with foreignlenders — American Express, Bank of America, Grindlays and StandardChartered Bank.CHL was founded by the Handa brothers — Sushiland Sunil — in 1985 as an IV fluids company with a capacity of 6 millionunits per year and an investment of Rs 4.5 crore.In 1988, it tappedthe capital markets with an IPO of Rs 36 lakh and a second offering of Rs 19crore partly convertible debentures in 1992 to fund expansion plans. It alsoissued global depository receipts of around Rs 80 crore in 1994 at the LuxemburgStock Exchange.