Indies Pharma secures $805-million loan facility by way of private placement bond from Sagicor

Business

Indies Pharma secures $805-million loan facility by way of private placement bond from Sagicor

BY DURRANT PATE
Observer Business writer

Friday, September 18, 2020

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Montego-based pharmaceutical distribution company Indies Pharma has secured a loan facility in the amount of $805 million by way of a private placement bond from Sagicor Investments Jamaica.

The private placement represents what is deemed as “growth capital”, which will be repaid by way of a five-year loan payment plan.

The loan was secured for two primary purposes, which were spelt out in a regulatory filing by Indies Pharma with the Jamaica Stock Exchange, where its shares are traded.

According to the regulatory filing, the first purpose for the loan proceeds is to repay Indies Pharma's parent company, Biporist Holding Inc, the amount of $398.75 million. This money was used by the parent company to purchase three acres of land in Montego Bay, St James, for the build out of warehouse space for Indies Pharma and other commercial development on the property.

PURPOSE FOR PRIVATE PLACEMENT FUNDS

The property in question, located at Lot 1 Montego Park Estates Ironshore, St James, is registered to a real estate subsidiary of Indies Pharma, Indies Pharma Business Park Limited.

The second purpose for the loan is to provide funding to develop and get approval for two abbreviated new drug applications from the US Food and Drug Administration.

In June this year Indies Pharma disclosed that it had negotiated with Sagicor Investments Jamaica for a loan by way of a private place bond in the amount of $1.12 billion.

The Business Observer inquired of Indies Pharma President and Chief Executive Officer, Dr Guna Muppuri whether the loan/ private placement has been reduced from $1.2 billion to $805-million or if the full sum of $1.12 billion has been secured but the $805-million represents the two purposes stated in the filing.

We also asked if the answer is in the affirmative what will be done with the $200 million plus balance. We got the following response from Dr Muppuri: “I will be able to answer your queries once we as a company meet with the Jamaica Stock Exchange (JSE) regulators before we disclose the information. I will have our corporate legal secretary, Venice Willams-Gordon advise me when to answer those questions raised by you. Please bear with us until she obtains the clearance from JSE for further disclosure. Look forward to speaking with you soon.”

LIABILITIES WENT UP WITH PROPERTY PURCHASE

For the nine months ended July 31,2020, liabilities increased by a whopping 754 per cent or $498.280 million, which was predominantly due to the loan for the purchase of land which will be used for the construction of Indies Pharma corporate office as well as the adoption of IFRS 16 'leases,' which requires the lessee to record a liability for the remaining contractual life of the lease payments.

For the nine months period, Indies Pharma Jamaica limited achieved revenues of $565.83 million, a decline of 1.7 per cent or $9.98 million over the corresponding period in 2019. This outcome resulted from the delay in shipments due to COVID- 19, which led to items being out of stock.

Although revenue decreased, growth and profitability for the period showed a slight increase in gross profit of 2.7 per cent or $10.37 million and net profit up 34.9 per cent or $41.24 million.

Indies Pharma Jamaica was incorporated in Jamaica on December 9, 2003 and co-founded by a medical doctor, Dr Guna Muppuri, and his wife, Vishnu Muppuri.

The company is headquartered in a commercial complex in Freeport, Montego Bay, with its retail unit, Trident Pharmacy, located at the nearby in Sam Sharpe Square. Indies Pharma currently services customers across all 14 parishes including over 400 pharmacies, private and public hospitals and government agencies such as the National Health Fund.


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