MRPL to float 125 mn GDR issue

MUMBAI, Aug 15: Mangalore Refinery and Petrochemicals Ltd MRPL, the joint venture company between Aditya Birla group and Hindustan Petrol...

MUMBAI, Aug 15: Mangalore Refinery and Petrochemicals Ltd MRPL, the joint venture company between Aditya Birla group and Hindustan Petroleum Corporation Ltd HPCL, has firmed up plans to launch a 100 million global depository receipt GDR issue by the first quarter of 1998. The proposed issue will have a green-shoe option of another 25 million.

According to company sources, leading FIIs have already started making presentations to lead-manage the issue. MRPL is the country8217;s first private sector oil company which started production in March 1996, three months ahead of schedule.

The proceeds of the GDR issue will finance MRPL8217;s expansion of its refinery capacity from three mmtpa to nine mmtpa. The two partners, Aditya Birla group and HPCL have also committed to inject Rs 364 crore each as their contribution to the expansion.

In order to retain their 26 per cent stake in the company both companies are planning to subscribe to fully convertible debentures FCDs of Rs 728 to be issued by MRPL shortly. The equity stake of both the partners will increase to 38.38 per cent after the conversion of the proposed FCD issue. The FCD issue will command a premium of Rs 9.26 for each Rs 10 share and it has the option of being converted any time within 18 months of allotment.

Subsequent to the capital dilution through the GDR issue, the equity stake of both partners will come down to its original 26 per cent. Company sources say that they are waiting for the domestic markets to pick up so that they can get a premium to their GDR issue. If launched, MRPL8217;s GDR will be first from the Indian private sector oil company. This is likely to be followed by Essar Oil and Reliance Petroleum GDR issues to finance their refinery projects in Jamnagar.

However, the proposed FCD issue may generate resentment among the other common shareholders of the company who will not be able to subscribe to the generous FCD issue. 8220;We are looking at the possibility of launching a rights issue for the common shareholders, though we have not finalised the plans,8221; said Jagdish Mehta, managing director of the company.

While HPCL has sought permission of its shareholders for investment in the FCD issue, MRPL has asked for its shareholders8217; nod for launching the issue. Indian Rayon, Kesoram Industries and Hindalco, the three companies of Aditya Birla group, would be investing in the issue.

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The Rs 2,695 crore MRPL refinery is situated in the coastal city of Mangalore in Karnataka and was the first oil company to start production after Indian government opened up the oil sector for private investment.