Final price bids today for HPL stake sale

RIL, GAIL, Cairn India, IOC, are four companies expected to submit price bids

Haldia Petrochemicals Ltd (HPL), the biggest in the segment in eastern India, is set to get a new principal promoter. The West Bengal government will receive the final price bid for its stake in HPL on Monday.

The government has been more than keen to exit the petrochem project and the road has been rocky. Six major companies from the sector had given an expression of interest for the HPL stake sale but as of now, it seems only four are likely to make the final price bid on Monday. These are Mukesh Ambani’s Reliance Industries, Anil Agarwal’s Cairn India, Indian Oil Corporation (IOC) and GAIL. Oil and Natural Gas Corporation and Essar Oil chose to opt out.

The state government has about 40 per cent stake in the company, via West Bengal Industrial Development Corporation. Deloitte India is the government’s advisor on the transaction. Purnendu Chatterjee-led The Chatterjee Group (TCG) has the right of first refusal over the shares and it will get one month’s time to match the highest bidder’s price.

HPL, once a signature project of the state and now a troubled joint venture, might get a fresh lease of life once the stake sale is through and a new promoter takes charge. The sale can fetch a hefty amount, running into thousands of crores, to the debt-trapped state.

TCG, the key promoter of HPL, has been at loggerheads with the government over management control. The existing legal tussle has been a major concern for the bidders. At a recent meeting with the government, the bidders had raised concerns on the proposed share purchase agreement (SPA); the state had to rework the final SPA to take care of some of these concerns.

Among the four bidders, IOC already has almost nine per cent stake in the company. Ambani’s RIL was eyeing HPL during the former Left government’s tenure; Ambani also met current Chief Minister Mamata Banerjee in Mumbai recently on HPL.

THE HALDIA PETROCHEMICAL SAGA

• 1985 Haldia Petrochemicals Ltd (HPL) incorporated as a venture between the West Bengal Industrial Development Corporation and R P Goenka Group
• 1990-93 RPG exits and the Tata group steps in
• May 1994 Purnendu Chatterjee becomes a part of the venture by signing an MoU with WBIDC and the Tatas
• 1997 Project execution starts
• Aug 2001 Commercial production begins
• Jan 2002 WBIDC transfers the disputed 155 million shares to TCG for Rs 155 cr at Rs 10 a share. WBIDC gives a loan of Rs 147 cr to TCG to buy these shares
• 2005 State decides to sell remaining 520 million shares to TCG but the deal falls through. TCG approaches the Company Law Board (CLB)
• 2007 CLB rules the entire stake should be sold to TCG. State goes to the high court and wins case in its favour. TCG approaches the Supreme Court
• 2011 SC dismisses the TCG petition against a decision of the HC, setting aside the CLB directive asking the state to exit the project by selling its stake to TCG
• Jan 2013 TCG files a special leave petition in the Supreme Court, challenging the HC order that barred TCG from filing a petition in the International Court of Arbitration in France
• May 2013 West Bengal government invites expression of interest (EoI) to sell its stake in HPL
• May 2013 The Chatterjee Group cautions investors over participating in bidding for share sale of WBIDC in HPL
• Jun 2013 RIL, Cairn India, ONGC, IOC, GAIL, Essar Oil submit EoIs
• Aug 2013 Essar Oil Pulls out from race
• Sep 2013 Stake sale delayed as bidders raise concerns
• Oct 7, 2013 Final price bid submission for state’s stake in HPL