Petronet LNG’s 5.2% ADB share may go to Chevron, Mittal

Asian Development Bank’s 5.2 per cent share in Petronet LNG Ltd...

Asian Development Bank’s (ADB) 5.2 per cent share in Petronet LNG Ltd (PLL) may go to third party Chevron and the Mittal Group as Petronet LNG CEO Prosad Dasgupta has made a legal case against any of the four promoters buying even a single share. Dasgupta has written to GAIL (India) Ltd that sale of “even one share” held by ADB to the four promoters or Gaz de France (GdF) would trigger the takeover code, turn the joint venture into a state-run firm and may result in delisting from the bourses. State-run GAIL, Oil & Natural Gas Corp (ONGC), Indian Oil and Bharat Petroleum each hold a 12.5 per cent stake to restrict the public sector holding at 50 per cent. GdF holds 10 per cent. Under the Share Holders’ Agreement (SHA), the five have the first right of refusal over ADB stake.

“Since the four promoters and GdF could be seen as entities acting in concert by virtue of the SHA, the purchase of ADB’s 5.2 per cent by any one of them will immediately trigger the takeover code — meaning collectively an open offer has to be made for at least 20 per cent shares held by the public,” Dasgupta wrote to GAIL chairman U D Choubey on February 29.

“This would result in the collective holding of the promoters and GdF increasing to 85 per cent. Since a company cannot remain listed if the public holding goes below 25 per cent, the takeover code would require the promoters and GdF to again collectively make an offer for the remaining 15 per cent, leading to delisting of the company,” he wrote. Copies of the letter have been sent to petroleum secretary, who officiates as Petronet LNG chairman, as well as the heads of IOC, ONGC and BPCL.

Dasgupta has argued that while “no merit would accrue to PLL “if it becomes a public sector enterprise, short-term damages would be a Rs 3,000-crore spending by the promoters and GdF in share purchases and the withdrawal of a $450 million loan from ADB, KfW and IFC for the Kochi project. Choubey wrote to Dasgupta on February 28, offering to buy ADB’s entire equity in case other promoters were not interested. He favoured Petronet LNG becoming a government undertaking as it would have “long-term strategic merit, given the increasing importance of energy security in the country”. The Petronet CEO argued that “if a third party acquires ADB’s 5.2 per cent who, on a quid pro quo basis, offers LNG to Petronet, we would have achieved induction of a strategic partner without diluting the promoters.” He wrote that he had told the Petronet LNG board on January 16 about Chevron and steel major Mittal being keen to form a joint venture with the company to supply LNG and/ or pursue creating liquefaction facilities dedicated to Petronet or India.