State to offer first right of refusal to The Chatterjee Group in event of auction of its’ stake in HPL

09-Dec-11
In case of an auction of West Bengal state's 43% stake in the Rs 10,000 crore Haldia Petrochemicals Ltd (HPL), the first right of refusal will be offered to The Chatterjee Group (TCG), as per Time Of India. At present, the state holds 43% stake in HPl, while TCG has 44% and IndianOil ( IOC) holds 9.6% stake. However, the minister made it clear that the government is unlikely to transfer 15.5 crore shares to TCG as per the 2003 agreement between TCG and the previous government. The current government woul d like to sell its stake in a transparent manner. As per the agreement, West Bengal Industrial Development Corporation (WBIDC), which holds the government's stake in HPL, was supposed to transfer 15.5 crore shares to TCG at Rs 10 each. TCG was supposed to pay the price in instalments, but after payment of Rs 38 crore, WBIDC stopped accepting payment from TCG following litigation between two promoters since 2005. The 15.5 crore shares constitute of around 9.7% of the paid up equity of HPL. Interestingly, these shares are not shown in the balance sheet of WBIDC as well which in turn means that it has 52 crore shares in the petrochem firm. Now, the 15.5 crore shares hold the key to the issue since if these were transferred to them then it would have got the majority with 53.5% stake. The state government has additional Rs 271 crore worth of preference shares but it does not have voting rights and would not count in ownership battle.
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