WB govt against TCG roping in HPL for Basell

The West Bengal government is against The Chatterjee Group (TCG) leveraging the Haldia Petrochemicals Ltd (HPL) balance sheet to borrow Rs 2...

The West Bengal government is against The Chatterjee Group (TCG) leveraging the Haldia Petrochemicals Ltd (HPL) balance sheet to borrow Rs 2,500 crore for the acquisition of Dutch company Basell Polyolefins Ltd — a subsidiary of Shell. TCG and the state government are principal promoters in Haldia with 60 per cent and 37 per cent stake.

Speaking on the sidelines of a symposium here today, State Industries Minister Nirupam Sen announced his government’s opposition to the ongoing negotiations between Haldia and its creditors led by IDBI to raise Rs 2,500 crore to fund the country’s largest overseas acquisition.

Sen contended that as Haldia has just turned around, it would be too big a risk for the company to raise this kind of money at this juncture.

As on March 31, 2004, Haldia was juggling a debt of Rs 4,341 crore on an equity of Rs 1,153. Post-corporate debt restructuring (CDR), its outstanding debt is at Rs 3,199 crore on a bigger equity base of Rs 1,410 crore.

This equity is shared between TCG, the state government and the Tatas, in the ratio of Rs 845 crore, Rs 520 crore and Rs 45 crore, respectively.

Sen also indicated that the government would like to disassociate with this potential risk and exit the company before the acquisition.

While Haldia officials refused to comment on the implications of the minister’s statement, this brings to the fore the government’s offer to TCG for divesting its 37 per cent stake in the company.

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Pricing remains the big issue in this sell-off, as industry estimates say TCG would have to raise about Rs 1,500 crore for the stake. So far there is no indication from TCG that it would be able to invest this amount.

Meanwhile, Haldia is yet to encash the Rs 150 crore cheque issued by Indian Oil Corporation (IOC) for a marginal stake of 7.5 per cent in the company. This is despite the board approving the stake transfer to IOC. The government is hoping that IOC will pick its stake in Haldia, should TCG fail to do so.

On Wednesday, Sen further clarified, “We are talking to both TCG as well as IOC. Our decision will be determined by both economic and political factors.”

He said the economic factor would be the price quoted by the two parties. The political balance would be struck on the security of Haldia’s future, he said.