Morepen Laboratories

Morepen Laboratories Ltd has informed BSE that the Company has entered into Agreements with G L India Mauritius III Ltd., a subsidiary of Avenue Capital Group (Investor), for subscribing Equity Shares and Naked Warrant to the time of 14.99% and 5% respectively of the Equity Share Capital of the Company.

The Company shall now proceed to issue and allot Equity Shares and Naked Warrants convertible into Equity Shares in due course on receipt of the subscription money and after necessary formalities.

The Company has issued a detailed Press Release in context of the execution of above - referred agreements, as follows:

"Morepen Laboratories Ltd on September 20, 2007 has announced the signing of a deal with Avenue Capital Group through its subsidiary G L India Mauritius III Ltd for a 14.99% stake in the Company.

As per Share Subscription Agreement signed on September 20, 2007, Avenue Capital is subscribing to 3.853 crore Equity Shares of Rs 2/- each at premium of Rs 18/- per share and will be infusing Rs 77.06 crores in the Company. In addition to this, Avenue Capital is also subscribing to Naked Warrants to the extent of 5% of the enhanced capital base and will be infusing a total of Rs 27.04 crores against these warrants. As per the terms of agreement Avenue Capital through its subsidiary G L India, Mauritius will pay 10% money on subscription and the balance 90% is to be paid within 18 months of signing the term sheet.

The Promoters are also fulfilling their commitment of subscribing to warrants by way of infusing fresh capital which are to be converted into 10.00 crore Equity Shares, amounting to Rs 60.00 crores. The total equity base of the Company will go upto Rs 74.12 crores comprising of 37.06 crore shares of Rs 2/- each. This will include 2.03% equity (75.17 lakh shares) issued to the Banks. Post subscription of these warrants the Promoter's stake in the Company will stand at 46%, G L India Mauritius (Avenue Capital) will hold 14% and the public holding will be 38% in the Company.

The entire Rs 140 crore being brought in by the Company as fresh capital will be utilized for repayment to banks under Corporate Debt Restructuring (CDR) scheme for which a settlement has already been arrived at. As a part settlement of debt, the Company has already Issued Preferential Capital of Rs 103 crore to the Banks which will have an option to be converted into equity after a period of seven years. Post this settlement, the Company will not have any pending liabilities with banks and will have a serviceable debt of only Rs 72.39 crores, bearing an average interest @ 8.25% p.a. As per the terms of the agreement the repayment of this loan is over a period of 10 years with a moratorium of 2 years. The interest servicing will be gradual with as low as 2% in the first year & 18% in the last two years. In addition, the Company will be carrying Zero Coupon Bonds of Rs 64.00 crore repayable in 9th and 10th year.

Immediately after settlement with Banks, the Company will start working on a scheme for settlement with Fixed Deposit Receipt (FDR) holders