State-run ONGC to buy government stake in HPCL for Rs 36915 crore
22 January, 2018, 19:47
With regards to MRPL, he said it is a standalone refinery but don't have marketing network.
Talking about synergies, he said HPCL has got a well-established network and has close to 15000 retail outlets.
The company will use a mix of debt, cash reserves and proceeds from a planned sale of stakes in Indian Oil and GAIL to fund its acquisition. HPCL is also setting up a state of the art greenfield Refinery cum Petrochemical Complex of 9MMTPA capacity in Rajasthan and is expanding its existing refinery.
India's biggest oil and gas producer, last week announced acquisition of HPCL for Rs 36,915 crore.
ONGC has entered into a share purchase agreement with the President for acquiring the 778,845,375 equity shares of HPCL (representing 51.11% of HPCL) on 20th January 2018. It expects to complete the transaction by end-January.
The SEBI has granted an exemption from the application of Regulation 23 of the Listing Obligations and Disclosure Requirements Regulation 2015 (LODR) to the ONGC for the transaction. Also, it has loan commitments from domestic and foreign lenders totalling roughly double the acquisition prices and the company would draw from them to make the payments in next one week, they said.
Throwing more light on the deal and funding for the HPCL acquisition, Shashi Shanker, CMD, ONGC said part of the funding will be done through internal accruals.
Accordingly, the Union Cabinet, in its meeting held in July past year, gave "in-principle" approval to the proposal and made a decision to set up an alternative mechanism to decide on the price, timing and the terms and conditions of the strategic sale. ONGC's filing with the BSE said the deal did not require any other regulatory approval as it has been exempted from the Competition Act.
While Pradhan said Hindustan Petroleum Corp Ltd (HPCL) will continue to remain a central public sector enterprise (CPSE) by virtue of government holding majority stake in ONGC, he did not say as to how the character of HPCL would have changed if ONGC's shareholding in HPCL would have increased to 77 per cent after the open offer.
"HPCL and ONGC have a complementary asset portfolio and through this acquisition, ONGC is gaining a midstream and downstream presence".