Earlier this month, in response to a petition filed by The Chatterjee Group (TCG), a major shareholder in Haldia Petrochemicals, CLB had refused to stay the allotment of 7.5% stake to Indian Oil Corporation (IOC). However, the CLB had stopped the issue of shares to the FIs. The CLB has ordered Haldia Petrochemicals to defer allotment of further shares and maintain status quo of all shareholders, until the final hearing.
Following the stay granted by the Company Law Board (CLB) on the issue of shares to the FIs (Financial institutions), HPL will have to pay higher interest rates. FIs are set to increase the average cost of debt back to the earlier level of 10.5% from the negotiated 8.5% on Haldia Petrochemicals' outstanding debt. FIs had agreed to charge a lower rate of interest in return for being allotted equity of Rs 135 crore at face value, as per HPL's CDR (corporate debt restructuring) program. HPL's debt is estimated to be in the region of Rs 3,000 crore to Rs 3,500 crore. However, with Haldia making substantial profits this year, an upward revision of interest rates will not concern the company as much as it would have a few years ago
But as the CLB decision is an interim one, decision is awaited at the final hearing of the matter fixed for September 27. Will equity allotment be allowed in the final order?
23-Aug-05 
{{comment.DateTimeStampDisplay}}
{{comment.Comments}}