(TH)
Cash rich Oil and Natural Gas Corp (ONGC) will raise its first debt ever, of Rs.25,000 crore, to part fund the Rs. 37,000 crore acquisition of government’s stake in Hindustan Petroleum Corp Ltd (HPCL).India’s largest oil and gas producer has about Rs. 13,000 crore in cash and would need to borrow the rest to fund the buying of government’s 51.11 per cent stake in HPCL.
ONGC has sought shareholder approval for “borrowing/ raising funds in Indian rupee and/ or foreign currency by issue of debt instruments (including bonds, non-convertible debentures and notes) in domestic and/ or overseas market” of Rs. 25,000 crore.
The borrowings would be for “acquisition of projects/ equity shares and/or going concerns, meeting capital expenditure, working capital requirements and general corporate purposes during the period commencing from the date of passing of Special Resolution till completion of twelve months thereof or the date of the next annual general meeting in the financial year 2018-19, whichever is earlier,” the company said in a shareholder resolution. The resolution would come up for voting at the company’s annual general meeting (AGM) of shareholders on September 27. The board of ONGC last month gave ‘in principle approval’ for the acquisition of the government stake in HPCL, which at today trading price of Rs. 477.65 is worth about Rs.37,000 crore.
ONGC holds 13.77 per cent stake in IOC, which at today’s trading price is worth Rs. 28,800 crore. It also holds 4.83 per cent stake in gas utility GAIL India Ltd, which is worth Rs. 1,550 crore. But the company is not likely to sell any of it to fund the HPCL buy, officials said.
A six-member Committee of Directors has been constituted to examine various aspects of the acquisition and to provide its recommendations to the board. The panel includes Chairman and Managing Director Dinesh K Sarraf and Director (Finance) A K Srinivasan as also independent directors K M Padmanabhan, Sumit Bose and Vivek Mallya. Director (Technology & Field Services) Shashi Shanker, who has been selected to succeed Sarraf as the chairman of ONGC at the end of September, will also be part of the panel.
