CLB's refusal to stay allotment in HPL to IOC thwarts Chatterjee

08-Aug-05

The Chatterjee Group (TCG), that had last week moved the CLB against allotment of shares to Indian Oil Corp. (IOC) in Haldia Petrochemicals Ltd (HPL) has suffered a setback. In its petition, TCG had alleged that the share allotment to IOC was an attempt to turn it into a minority in HPL, adding that if more shares were allotted to financial institutions, TCG would become a minority. Keeping this plea in mind, the CLB chairman has deferred the allotment of shares worth Rs 135 crore to lenders under the corporate debt restructuring package (CDR) approved by IDBI. The Company Law Board (CLB) refused to stay the allotment of 7.5% equity in HPL to IOC, adding that this is "subject to final order" on the petition. The date for final hearing on the matter has been fixed for September 27. The CLB order stated "At this stage, I do not propose to put any fetters on the right of IOC on the shares other than stipulating that the impugned allotment shall be subject to the final order on the petition." HPL has been asked to defer allotment of any further shares till the disposal of the petition and maintain the shareholding of all the shareholders. Even after the allotment to IOC, TCG would continue to hold majority 53% stake in HPL. The CLB has also restrained HPL from issuing shares to financial institutions until it takes a final decision in the case. Under Haldia Petrochem's debt recast package, debt worth Rs 135 crore has to be converted into equity by issuing shares to FIs.