The financial restructuring issue of Haldia Petrochemicals Limited (HPL) has figured separately in the finance and petroleum ministries. While IDBI-led lenders built a strong case before the finance ministry for induction of Indian Oil Corporation (IOC) as strategic investor in HPL, HPL’s promoters have indicated their preference for Gail India Ltd as the new equity partner.Induction of a strategic partner in HPL is the key to survival of this loss-making entity. The process of HPL’s financial restructuring was initiated more than one and a half year back, when promoters of the company approached IOC for strategic investment. However, at that time HPL sponsors were unable to resolve issues relating to post-induction equity structure amongst promoters besides grant of management control of HPL to IOC.Says Tarun Das in a letter dated May 14 to Finance Minister Jaswant Singh, ‘‘Gail has confirmed equity infusion of Rs 200 crore, and The Chaterjee Group (TCG) has also agreed to arrange Rs 268 crore. With this additional equity infusion, and Gail’s entry as a partner, HPL can look forward to a positive and prosperous future’’.This letter is obviously in response to IDBI’s recent missive to Finance Secretary S. Narayan, expressing dissatisfaction over the proposal to induct Gail as a new equity partner in HPL. The lenders have communicated that Gail’s terms of investment are inadequate for bail-out of HPL.In a letter dated April 25, which has been jointly addressed to Finance, Banking and Petroleum secretaries and to chairman HPL, IDBI’s executive director, A.K. Doda said, ‘‘We note that the company/sponsors continue to pursue an adhoc approach with an attempt to unilaterally reduce the fresh equity infusion by as much as Rs 232 crore.’’ At a recent meeting held in the petroleum ministry, Gail contended that it entered into negotiations with HPL’s management only after IOC failed to strike a deal with the promoters. Also, Gail is already well entrenched in petrochemicals, and has forged a marketing alliance with HPL. Lastly, Gail said it is open to the idea of investing much more than Rs 200 crore, agreed in principle.As per IDBI, ‘‘Lenders including SBI and ICICI Bank are finding it difficult to wait any further. Immediate steps would need to be initiated to expeditiously address the concerns expressed by lenders by re-initiation of negotiations with IOC for their induction as strategic investor,’’ IDBI adds.
