The Chatterjee Group (TCG) has emerged as the undisputed single largest shareholder of Haldia Petrochemicals Ltd (HPL) after it picked up a part of the Bengal government's shares, bringing down the curtain on a decade-old ownership impasse that dogged the state's showcase industrial project.
TCG, headed by Bengali industrialist Purnendu Chatterjee, executed the long-pending transaction by December 31 by coughing up Rs 653 crore for 26 crore shares at Rs 25.10 apiece.
The deal, poised to be one of the largest publicly known foreign direct investments in Bengal in recent times, comes just ahead of the Bengal Global Business Summit this week, meant to showcase the state as an investment destination.
The HPL share sale was crucial as the Reserve Bank had set it as a precondition for a fresh round of loan restructuring, to reduce the interest burden and infuse fresh working capital loan.
Clearing the clutter at HPL could well be one of the top achievements of the Mamata Banerjee-government, as successive administrations had failed to resolve the imbroglio.
Chatterjee and West Bengal Industrial Development Corporation Limited fought a bitter ownership battle in various courts of India and abroad during the tenure of erstwhile chief minister Buddhadeb Bhattacharjee and later Mamata Banerjee.
After finance minister Amit Mitra took charge of the industry portfolio, the relations between the promoters began to look up and the two parties started to work together to bring the company out of the woods.
Following the transaction, which will also qualify as the largest big-ticket divestment that Bengal has ever undertaken, TCG will hold around 48.5 per cent equity in the company compared with 35.02 per cent by state government entities.
However, TCG's stake will go up to 56.2 per cent if the preference shares held by three state firms are not taken into account. Essex Development Investments (Mauritius) Ltd, a TCG entity registered in Port Louis, Mauritius, scooped up the shares in HPL after the transaction.
The deal may also put to rest doubt over TCG's ability to bring in equity fund in HPL.
"He (Chatterjee) has brought in whatever he had committed and within the RBI stipulated time frame to facilitate another round of debt restructuring. Over the years, the lenders have been demanding resolution of the ownership dispute. This has now happened. Chatterjee is clearly in the driver's seat," a source privy to the deal said.
According to an agreement with the Bengal government in September 2014, TCG will buy another 26 crore shares over a period of seven years after a two-year moratorium.
This will leave WBIDC with 15.5 crore shares, which is the mother of all disputes between the two promoters. The issue is likely to be resolved through legal means. Moreover, the state will also have 27.1 crore preference shares.
The government's presence has so far shielded HPL from going belly up several times. Recently, the Union commerce ministry exempted the company from paying Rs 2,277.18 crore in cash on the grandiose ground of "public purpose".
The Centre noted that the Bengal government had provided sales tax remission of Rs 1,877.9 crore already and proposed to give another Rs 3,285.47 crore by way of more incentives, apart from equity, loan, and preference shares.
Set up in 1994 as a joint venture among TCG, WBIDC and Tata Group, HPL began commercial production in 2000. Thereafter, the company went through a roller-coster ride making profit in some years and plunging to losses in more.
The state government tried to bring in a strategic investor in the form of Indian Oil Corporation but the deal fell through twice, the last being in 2014.
Observers said the focus would now be on rebuilding the company, making an operational profit now, and taking it to a sustained growth trajectory.
TCG, headed by Bengali industrialist Purnendu Chatterjee, executed the long-pending transaction by December 31 by coughing up Rs 653 crore for 26 crore shares at Rs 25.10 apiece.
The deal, poised to be one of the largest publicly known foreign direct investments in Bengal in recent times, comes just ahead of the Bengal Global Business Summit this week, meant to showcase the state as an investment destination.
The HPL share sale was crucial as the Reserve Bank had set it as a precondition for a fresh round of loan restructuring, to reduce the interest burden and infuse fresh working capital loan.
Clearing the clutter at HPL could well be one of the top achievements of the Mamata Banerjee-government, as successive administrations had failed to resolve the imbroglio.
Chatterjee and West Bengal Industrial Development Corporation Limited fought a bitter ownership battle in various courts of India and abroad during the tenure of erstwhile chief minister Buddhadeb Bhattacharjee and later Mamata Banerjee.
After finance minister Amit Mitra took charge of the industry portfolio, the relations between the promoters began to look up and the two parties started to work together to bring the company out of the woods.
Following the transaction, which will also qualify as the largest big-ticket divestment that Bengal has ever undertaken, TCG will hold around 48.5 per cent equity in the company compared with 35.02 per cent by state government entities.
However, TCG's stake will go up to 56.2 per cent if the preference shares held by three state firms are not taken into account. Essex Development Investments (Mauritius) Ltd, a TCG entity registered in Port Louis, Mauritius, scooped up the shares in HPL after the transaction.
The deal may also put to rest doubt over TCG's ability to bring in equity fund in HPL.
"He (Chatterjee) has brought in whatever he had committed and within the RBI stipulated time frame to facilitate another round of debt restructuring. Over the years, the lenders have been demanding resolution of the ownership dispute. This has now happened. Chatterjee is clearly in the driver's seat," a source privy to the deal said.
According to an agreement with the Bengal government in September 2014, TCG will buy another 26 crore shares over a period of seven years after a two-year moratorium.
This will leave WBIDC with 15.5 crore shares, which is the mother of all disputes between the two promoters. The issue is likely to be resolved through legal means. Moreover, the state will also have 27.1 crore preference shares.
The government's presence has so far shielded HPL from going belly up several times. Recently, the Union commerce ministry exempted the company from paying Rs 2,277.18 crore in cash on the grandiose ground of "public purpose".
The Centre noted that the Bengal government had provided sales tax remission of Rs 1,877.9 crore already and proposed to give another Rs 3,285.47 crore by way of more incentives, apart from equity, loan, and preference shares.
Set up in 1994 as a joint venture among TCG, WBIDC and Tata Group, HPL began commercial production in 2000. Thereafter, the company went through a roller-coster ride making profit in some years and plunging to losses in more.
The state government tried to bring in a strategic investor in the form of Indian Oil Corporation but the deal fell through twice, the last being in 2014.
Observers said the focus would now be on rebuilding the company, making an operational profit now, and taking it to a sustained growth trajectory.
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