Haldia Petro stake sale set to be delayed

Bidders raise concern over share-purchase agreement; meeting slated for early this week

Haldia Petrochemicals Ltd (HPL)’s stake sale is set to be delayed, as bidders have raised concern at the share-purchase agreement prepared by the West Bengal government and its transaction adviser, Deloitte India. A meeting is slated to happen this week between the state government and the five bidders to sort the issues.

This would delay the submission of price bids beyond Saturday and further put off the sate government’s selection of the final bidder, scheduled for now September 30.

“It is almost impossible for bidders to now submit final price bids by August 31,” an HPL official said.

HIGH STAKES

• The West Bengal government, which holds about 40% stake in Haldia Petrochemicals via West Bengal Industrial Development Corp, has put up its stake for sale
• Mukesh Ambani-led Reliance Industries Ltd, Cairn India Ltd and state-run Indian Oil Corp, GAIL India and Oil and Natural Gas Corp are in the hunt for a stake in eastern India’s biggest petrochemical company

The West Bengal government, which holds about 40 per cent stake in HPL via West Bengal Industrial Development Corp, has put up its stake for sale. At present, Mukesh Ambani-led Reliance Industries, Cairn India and state-run Indian Oil Corp, GAIL India and Oil and Natural Gas Corp are in the hunt for the stake in eastern India’s biggest petrochemical company.

Last week, after the empowered group of ministers on HPL announced its intent to select the final bidder by September 30. Even after selection of the final bidder, the state government has to give a month’s time to  The Chatterjee Group (TCG), another key promoter, to match the price offered by the highest bidder. Purnendu Chatterjee-led TCG has the right of first refusal over the government’s share in HPL.

After the pre-bid meeting with five bidders, the state government, in consultation with Deloitte India, is expected to circulate the final draft agreement among the suitors.

Among the concerns raised by the bidders on the share-purchase agreement is the fact that the suitors want to pay, when successful, in tranches rather than giving the full amount at once.

However, the HPL official ruled out the claim by bidders that the agreement prepared by the government did not mention about TCG’s right of first refusal. “This was mentioned clearly in every stage of documentation clearly so this is something which would not be entertained by the government. Bidders raised concerns over the legal disputes and during a meeting last week, the government has assured them that it will take care of the matter and would try the stake sale to be a smooth process,” the official added.

The government received a boost from a recent Supreme Court order when the court refused to stay on a special leave petition filed by TCG challenging a Calcutta High Court order barring it from approaching the International Court of Arbitration in Paris.