India's Dishman asks holders of 0.5% convertible bonds to allow guarantee of additional debt

New York, April 14 - Dishman Pharmaceuticals and Chemicals Ltd. is soliciting consents from holders of its 0.5% unsecured foreign currency convertible bonds due 2010 to allow it to take on extra borrowings.

The company wants to amend the terms and conditions of the bonds to allow it and its subsidiaries to take on up to Rs. 9 billion of additional secured debt and to issue guarantees for those borrowings.

Proceeds from the new financing will be used to fund additional production at Bavla, India, and new facilities in China and other countries. The expansion will allow the company to take on more business in the contract research and contract manufacturing segment.

Responses to the solicitation are due by May 15.

Dishman is not proposing to pay a consent fee. But it said the expansion will generate additional revenues, which will benefit bondholders, and offer more security for the debt, even after allowing for the new borrowings.

The company also noted that it now has more assets compared to the size of its secured loans than it did when the convertibles were issued.

The company sold $50 million of the convertibles in August 2005 but only $2.5 million are now outstanding.

Dishman manufactures chemicals and active pharmaceutical ingredients and is based in Ahmedabad, India.

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