Julphar shareholders approve restructuring plan through rights issue

The troubled drug maker now aims to re-enter Saudi Arabia and Kuwait

Ras al Khaimah - June 30, 2010 - Operators handle pages of five hundred milligram tablets of the Type 1 Diabetes medicine Dialon along the conver belt of this packing machine in Gulf Pharmaceuticals Julphar in Ras al Khaimah, June 30, 2010. (Photo by Jeff Topping/The National)
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Shareholders of Gulf Pharmaceutical Industries, one of the biggest generic drug manufacturers in the Middle East and North Africa, approved the company's plan to restructure its capital through a rights issue.

The plan aims to “strengthen the company’s capital position and improve its debt profile”, the company said in a statement on Sunday. The capital restructuring involves first reducing the company's share capital by just over Dh503m by cancelling shares to extinguish accumulated losses, and then raising up to Dh500 million through the issuance of new shares with a nominal value of Dh1.

The board of the troubled drug maker in January recommended the plan to the shareholders. The capital restructuring is subject to the approval of the UAE’s market regulator, the Securities and Commodities Authority.

Last year the company had to recall several of its products from cough syrups to mouthwash and its operations were adversely affected by a temporary suspension of the export of its products to Saudi Arabia, Kuwait and Oman.

The Ras Al Khaimah-based firm has also replaced several of its top executives including its chief executive and appointed new board members as financial stress mounted on the firm.

Following "comprehensive changes" to the board and its management team, Julphar is now looking to re-enter Saudi Arabia and Kuwait, expand its product portfolio and increase investment in its quality control systems. The firm is also implementing a cost optimisation initiative with a view to "returning to profitability and rebuilding its leading market position", it said.

"The capital restructuring will mark a milestone in the transformation that is underway at Julphar, which has a clear objective to restore our position as a leading regional pharmaceutical company within three years," said Essam Farouk, who was appointed chief executive in April.

Mr Farouk replaced Jerome Carle, who stepped down as chief executive in September.

"The recent relaunch of over 80 of our products in Oman demonstrates our commitment to serving all markets in the region," Mr Farouk said. "In the months to come, we will hold course and continue to upgrade our quality control framework as part of a large-scale review of our operating procedures and cost structure."