Matters between the West Bengal Government and Purnendu Chatterjee seem to have reached a stalemate as the Government has rejected Chatterjee’s attempt for a leveraged buyout of Haldia Petrochemicals Limited. The State Government has arrived at a decision to allow the Indian Oil Corporation (IOC) to place a director on the board of HPL. This follows the state government’s decision to encash the IOC cheque of Rs 150 crore, issued on February 18, within the expiry date. Earlier this year, approval was given for issuing 15 crore shares for Rs 150 crore in Haldia Petrochemicals. However, the earlier decision seems to be reversed, as the state government says that the percentage of shareholding to be issued to IOC, and the price of the shares have not yet been fixed. The state government will continue to hold its stake along with the TCG and the financial institutions.
A recap into the matter shows that at the outset, HPL chairman Tarun Das had invited IOC to join HPL. A proposal for a 7.5% stake by IOC was approved by the HPL board. However, despite board approval and IOC issuing the cheque to HPL in February, neither was the cheque encashed nor have the 7.5% shares been issued. In a reaction to the delays in non-issuance of shares, IOC issued legal notices to HPL. The key reason for the delay seemed to be the non-compliance of Purnendu Chatterjee (one of the principal promoters of HPL). TCG was against the idea of bringing in IOC as a strategic investor, as the group dreaded that IOC may eventually buy out the West government's stake in HPL and emerge as the majority shareholder.
01-Aug-05 
