West Bengal Govt's "buy or sell offer" to TCG under EC glare

03-Apr-06

The West Bengal Industrial Development Corp (WBIDC), on behalf of the government, has submitted a proposal before the Company Law Board, which is hearing a dispute between The Chatterjee Group and the state. In a proposal placed before the Company Law Board (CLB) that is adjudicating the dispute, the government offered to either acquire or sell its entire holding in the company to Chatterjee at a price that will be higher than the Rs 28.80 per share it had sought earlier and which its partner refused to pay. On April 12, the CLB would consider whether it accepts the state proposal in toto. The West Bengal government's buy-or-sell offer to The Chatterjee Group (TCG) over their holdings in Haldia Petrochemicals Ltd has attracted the attention of the Election Commission. This formula suggested by WBIDC, if accepted by TCG, could have two outcomes. If TCG, one of the main promoters, decides to sell out, the government would have to pay over Rs 2,000 crore to acquire TCG stake, which the state government has offered to honour within a week. With Assembly elections due in April-May, could go against the model code of conduct. As per the second part of the offer, the government is prepared to buy Chatterjee out at the price at which it is prepared to sell itself. The CLB has asked Chatterjee to convey his response by April 12. If Chatterjee does accept the proposal, he will have seven days to decide from the time the government makes its price offer. If he does not make up his mind by then, the government will buy him out. If he decides to buy the government's stake, he has to pay up within two weeks. In the case of failure to meet the deadline, the government will buy him out.