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Rights issue an option to bail out Haldia Petrochem

Calcutta, Dec. 16: The board of Haldia Petrochemicals may discuss raising funds for the cash-starved company through a Rs 1,300-crore rights issue at its meeting tomorrow.

Each share in the proposed issue will be priced at Rs 25.10 apiece, matching the quote offered by Indian Oil in October to buy the Bengal government’s stake in the petrochem company.

While the West Bengal Industrial Development Corporation, financial institutions and Indian Oil Corporation are in favour of such a proposal, it is likely to be opposed by The Chatterjee Group, the private shareholder of the firm.

However, a simple majority in the board meeting will be good enough to pass the resolution.

The rights issue, if approved, will be the first after HPL went into commercial production in 2001. If subscribed in full by all the stakeholders, it would not alter the company’s present shareholding pattern, under dispute at present.

The fresh cash infusion is being proposed at a time WBIDC’s plan to offload its stake in favour of IOC has hit a speedbreaker. The Supreme Court has allowed TCG to approach the International Chamber of Commerce in Paris for an arbitration on a contentious block of 15.5 crore shares. Both TCG and WBIDC claim ownership of the block, and the latter has put it on sale.

Indian Oil emerged as the only valid bidder for WBIDC’s stake, which includes the 15.5-crore-block and another relatively undisputed 52 crore shares, offering Rs 25.10 apiece. It valued the government’s holding at around Rs 1,700 crore.

The state government had planned to induct IOC into Haldia Petrochemicals and give it management control to revive the cash-strapped company with fresh funds infusion. After the move hit a legal hurdle, the state went to the financial institutions for cash support. But they refused any help unless there is fresh equity infusion from the existing shareholders.

Sources said industries minister Partha Chatterjee, who is also the chairman of HPL, held a meeting with TCG chairman Purnendu Chatterjee in the presence of Bengal finance minister Amit Mitra. Minister Chatterjee also held a series of meetings with senior state officials last week.

HPL is losing Rs 2 crore every day and the peak net worth is likely to be fully eroded by this month. The accumulated loss of the firm is around Rs 1,800 crore. The plant is running at 41 per cent of its peak capacity as HPL has no cash to buy raw material naphtha.

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