Deutsche Bank ready to fund TCG's Haldia buyout

20-Jul-05

As reported yesterday, Purnendu Chatterjee seems eager to acquire the Bengal government's 36.87% stake in Haldia Petrochemicals (HPL) through a leveraged buy-out route. In a leveraged deal, over 70% of the money needed for a buyout is borrowed from banks and financial institutions, subject to lenders' stipulations and conditions. Deutsche Bank has emerged as the banker for The Chatterjee Group in the deal. TCG is willing to pay the state government just under Rs 29 for its shares in HPL, within 21 to 30 days, only if the state government got Indian Oil Corporation out of HPL. This would mean the shelving of the government-proposed deal to sell HPL shares to IOC at Rs 10 per share. The state government will have to get a release from IOC for the deal to go through. This has added a new twist to the battle for the control HPL between co-promoters: The Chatterjee Group (TCG), the government of West Bengal and prospective investor Indian Oil Corporation (IOC). All share transactions at HPL would also require clearance from its lenders.