The lenders of Haldia Petrochemicals Ltd have agreed to chip in Rs 1,500 crore (Rs 15 billion) for The Chatterjee Group's $5.7 billion acquisition plan of the Dutch major, Basell Polyolefins. HPL will get a slice of Basell's equity with this investment.
A consortium led by TCG, the promoters of HPL, recently won the race for the acquisition of Basell. Led by the Industrial Development Bank of India, the corporate debt restructuring cell met in Mumbai on Friday to take stock of the situation of HPL's participation in the Basell acquisition. Purnendu Chatterjee of TCG attended the meeting.
The lenders, who have sanctioned Rs 1,000 crore (Rs 10 billion) less than what HPL wanted to invest, did not allow HPL to go out of the CDR purview. However, it has given HPL an "in-principle approval" for the acquisition, subject to the approval of its board.
"Technically, once a company is referred to the CDR, it cannot get out of its ambit unless the rules are amended," banking sources said.
Banking sources said, HPL has fulfilled most of the stipulations of the CDR cell except for its initial public offer.
"It has repaid a large part of the debt and brought down its debt equity ratio substantially," bankers said. HPL has posted profit of Rs 575 crore (Rs 5.75 billion) in 2004-05. It has an equity capital of Rs 1,410 crore (Rs 14.1 billion).
TCG and associates have pumped Rs 150 crore (Rs 1.5 billion) into HPL as required under the debt revamp plan. The company repaid debts of Rs 468 crore (Rs 4.68 billion) on July 31, 2004.
Meanwhile, HPL board is yet to decide whether it would take Indian Oil Corporation, as an equity partner. Petroleum and natural gas minister Mani Shankar Aiyar had said last week that IOC paid Rs 150 crore (Rs 1.5 billion) for a 7.5 per cent stake in HPL.
IOC has written to HPL asking for the shares but these have not been issued since TCG is in talks to buy out the Bengal government's shares in the petrochemical firm.