The Telegraph
Since 1st March, 1999
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Purnendu changes HPL tack

Calcutta, July 18: Purnendu Chatterjee wants to acquire the Bengal government’s 36.87 per cent stake in Haldia Petrochemicals (HPL) through the leveraged buy-out route.

In a leveraged deal, more than 70 per cent of the money needed for a buyout is borrowed from banks and financial institutions. However, the lenders place riders.

Purnendu needs to shell out Rs 1,560 crore to buy out the government in HPL. If he goes in for a leveraged buy-out, he will have to bring in Rs 468 crore, while Rs 1,092 crore will come from banks and FIs. Sources said Purnendu is talking to Deustche Bank and State Bank of India for the loan.

The Bengal government is yet to get back to Purnendu on the issue. However, it has decided not to wait for an indefinite period for Purnendu to buy out its shares in HPL. The state will rethink the issue if the July 31 deadline slips by.

“The government will not wait for an indefinite period and will have to evaluate the situation after the deadline expires,” Bengal industry secretary Sabyasachi Sen told The Telegraph.

However, he refused to comment on Purnendu’s proposal of a leveraged buy-out.

Sen said Purnendu should come up with the required funds and acquire the government’s stake.

The decision has been prompted by Indian Oil Corporation’s eagerness to join HPL and acquire the government’s stake.

Indian Oil chairman Sarthak Behuria met Bengal chief minister Buddhadeb Bhattacharjee today and requested that his firm be given a 7.5 per cent stake in exchange for the Rs 150 crore it has already paid to HPL.

After his half-hour meeting with the chief minister, Behuria said: “We have requested him to issue us shares against Rs 150 crore. The chief minister has assured us that the matter is being looked into.”

IOC had sent the Rs 150-crore cheque on February 18. The HPL board accepted the cheque, but it had not been encashed so far. The board had approved IOC’s investment proposal. The cheque is valid till August 18.

Behuria confirmed that IOC had served a legal notice on HPL. “The government has not replied to us. We will examine our next course of action,” he added.

Behuria did not rule out the possibility of acquiring the government’s stake in HPL, if offered. “We will surely examine the proposal if it comes to us. We are keen to enter the petrochem sector,” he said.

Behuria has proposed an expansion of Haldia Refinery. IOC wants to use the land occupied by the closed Haldia Fertiliser to expand its refinery operations.

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