In a statement to shareholders yesterday, Taro Pharmaceutical Industries Ltd. (Pink Sheets: TAROF.PK) disclosed some figures for the first time. Taro has called a shareholders meeting for July 23 to obtain their approval for the acquisition of the company by Sun Pharmaceutical Industries Ltd. (BSE: 524715) of India. It explicitly told the shareholders that unless they approved the acquisition, the company would initiate bankruptcy proceedings.
The figures show a drop in cash reserves from $72.8 million in January 2006 to $11.5 million at the end of April 2007. The company has $240 million in liabilities. Unaudited sales figures for 2006 were $180-200 million, down from $295 million in 2005. Finally, the company’s net loss ballooned to $95-120 million in 2006, compared with a net profit of $5.7 million in 2005.
Taro said that its huge losses were caused by plunging revenue due to accumulated inventories at its distributors. The company also launched no new products during 2006, which could have offset the hole caused by pressure on prices for generic drugs.
Taro added that another reason for the losses were heavy expenses related to the restatement of its financial reports for 2003 and 2004, and the investigation against the company for improper recording of customers’ balances and the recognition of income. The company said that the banks had refused to grant it new loans, and that the company’s financial crisis was worsening.
In a statement to shareholders, Taro chairman Dr. Barrie Levitt wrote, “We’ve suffered the loss of key development personnel, and we’ve struggled to maintain good relations with suppliers and customers.” He said that without the immediate $41 million cash injection from Sun Pharameuticals, the company would be unable to meet payments to its bondholders.
Published by Globes [online], Israel business news - www.globes.co.il - on June 12, 2007
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