The West Bengal government has given a time limit of six months to Purnendu Chatterjee to arrive at a decision to sign a pact for buying the governments 36% stake in Haldia Petrochemicals (HPL) for Rs 1,560 crore, at a premium of Rs 20 per share. At a face value of Rs 10 a share, the government’s stake is worth Rs 520 crore. The new agreement to be signed between the two could contemplate a penalty clause, which could be invoked if Chatterjee fails to bring money on time. Negotiations are in progress on the share price, with Chatterjee indicating willingness to buy the shares at par or pay a premium of Rs 2, since HPL has just turned around and started booking profits. If Chaterjee pumps in the money, he will become the single-largest shareholder of the Rs 5,170-crore HPL and wield management control.
The new agreement to be signed with Chatterjee will include the clause giving the government the right to offer its shares to others in the event of no response from Chatterjee, making it easier to invite Indian Oil Corporation (IOC) to invest in HPL. Previous agreements were signed between the two in 2002 and 2004 — before the corporate debt restructuring (CDR) of HPL. They did not give freedom to the government to sell out to other companies ready to enter HPL.
HPL expects a net profit of around Rs 750 crore for 2004-05. Chatterjee has been insisting on gaining full control, and always expressed reluctance to let HPL fall into the hands of public sector. Now, is his chance to gain total control.
22-Apr-05 
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