Wockhardt will divest a 24 per cent stake in its unlisted subsidiary, Wockhardt Hospitals.

A company spokesperson confirmed this, setting at rest speculation over the exact stake the promoters - the Khorakiwala family - are looking to sell in the 12-hospital subsidiary company.

This was the amount the promoters had planned to divest in an Initial Public Offering in January 2008, but had cancelled, owing to the steep fall in the stock markets.

The Khorakiwalas expect to raise roughly Rs 500 crore (Rs 5 billion) from the stake sale, which values Wockhardt Hospitals at roughly Rs 2,000 crore (Rs 20 billion). In January, the promoters had expected to raise Rs 700 crore (Rs 7 billion) from a 24 per cent divestment through the IPO.

The spokesperson also denied that talks were on with Fortis Healthcare [Get Quote] or Apollo Hospitals [Get Quote] for a deal. "We are looking at selling a minority equity stake to an investor," the spokesperson added.

The flagship company, Wockhardt Ltd [Get Quote], has also just received a working capital loan of Rs 175 crore (Rs 1.75 billion) - Rs 105 crore (Rs 1.05 billion) from State Bank of India [Get Quote] and the remaining from a private bank - to help the company tide over its cash flow problem.

Last week, the drug major went in for a Corporate Debt Restructuring mechanism, a system to deal with cases in which multiple lenders are involved.

The reference to CDR was forced by the fact that Wockhardt's net debt grew 17.25 per cent to Rs 3,400 crore (Rs 34 billion) in December 2008 from Rs 2,900 crore (Rs 29 billion) a year ago.

Simultaneously, Habil Khorakiwala, who  was earlier chairman and managing director, stepped down as managing director but continues as executive chairman. The board nominated his son Murtaza H Khorakiwala the managing director, subject to shareholder approval.