Tatas HPL exit after debt recast

The sale of stake held by Tata companies in Haldia Petrochemicals Ltd (HPL) will take place only after the corporate debt restructuring (CDR) is completed.

PSU major GAIL India, which has shown interest in buying out Tata's share, said there was little chance of GAIL's investment in HPL and Tata's exit from the company taking place simultaneously.

At present, the Tata Group holds 14 per cent stake in HPL, while the rest is equally held by The Chatterjee Group (TCG) and the government of West Bengal.

"Our first priority is to invest Rs 332 crore in HPL as per CDR package. I do not envisage the Tata buyout happen concurrently.

"We have started discussions with the promoters but it will take some time," Proshanto Banerjee, chairman and managing director (CMD) of GAIL, said.

GAIL is now pressing for signing the shareholders agreement and share subscription agreement with the existing promoters so that the company can approach the public investment board (PIB) and the Cabinet Committee on Economic Affairs for approval.

GAIL has demanded two berths on the board and representation on key committees like audit, purchase and business development. "We are not going to be a sleeping partner in the company," Banerjee pointed out.

He made it clear the investment in HPL would be made at Rs 10 per share. It would put GAIL's stake in HPL between 16-18 per cent.

If it manages to buy the Tata stake, which will fall below 9 per cent on enhanced equity base, GAIL will have close to 26 per cent stake in HPL.

HPL promoters have a shareholder agreement in place which says that the existing promoters will have first right of refusal in case any one of them wishes to sell out. GAIL will require a no objection certificate from the state government and TCG before buying the Tata goup's stake.

Nirupam Sen, state industry minister, did not comment on the issue. "Our focus is now on completing the CDR package. The issue of Tata's exit will be taken up later," he pointed out.

In fact, in the longer term the state government was also looking at paring its exposure in HPL.

Sen said the possibility of withdrawing completely from the company could also not be ruled out.