The Hindu Business Line : CLB formula may resolve spat over Haldia Petrochem

The Company Law Board (CLB) Chairman, Mr S. Balasubramanian, has worked out a compromise formula, which would enable to amicably resolve the tussle between The Chatterjee Group (TCG) and the West Bengal Government on Haldia Petrochemicals Ltd (HPL). As per the formula, TCG gets to retain largest share in HPL.

Mr Balasubramanian has proposed that all agreements between TCG (petitioner), the West Bengal Industrial Development Corporation (WBIDC) and the West Bengal Government relating to transfer of shares held by the latter to the former would stand cancelled.

Besides, whatever part-payment has been received by WBIDC from TCG would be refunded. It has also proposed that TCG would not contest the allotment of shares worth Rs 150 crore of HPL already made to Indian Oil Corporation and also not object to the allotment of shares worth Rs 135 crore made to IDBI in terms of corporate debt restructuring package.

After allotment of shares to IDBI, TCG would be allotted such number of equity shares, worth about Rs 395 crore, which would increase its shareholding to 51 per cent.

This allotment would be at par as in the case of Indian Oil and IDBI, the formula stipulates. It also suggests that HPL will go in for an initial public offering either by book building method or otherwise within a set timeframe of three to four months.

As for benefits of this suggestion, HPL would have an immediate cash inflow of nearly Rs 395 crore, which could be utilised to clear the outstanding loans of the company, thus reducing its interest liability. It would also improve the debt-equity ratio of the company, which would be a favourable factor while going for an IPO.

WBIDC could divest its share either fully or in part along with IPO, by which it could get a realistic price for its shares, the formula suggests. Even otherwise, once the shares are listed it can choose the time of disinvestments.

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