The West Bengal government’s legal dispute over the aborted sale of 155 million shares of Haldia Petrochemicals Ltd (HPL) to its partner, The Chatterjee Group (TCG), could hinder the state’s proposed divestment of its 39.99% stake in the firm. Despite TCG being unable to legally block the proposed stake sale (which includes the 155 million disputed shares that comprise about 9.18% of HPL’s equity capital), bidders seek a firm commitment from the West Bengal government that they will be compensated in the event of court orders going in favour of TCG.
The question that troubles the buyers is, “What if the successful bidder pays a premium to acquire the shares held by the government and is eventually ordered by courts to transfer a substantial stake to TCG at Rs.10 a share (face value)?” This makes it vital for the state government to indemnify the successful bidder against any loss arising out of unfavourable court orders in respect of the disputed shares. The potential loss for the successful bidder may not be financial alone. If TCG manages to legally secure these 155 mln shares, its stake will top.
16-Sep-13 
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