(ET)
Oil and Natural Gas Corp (ONGC) will soon seek shareholders’ approval to raise a debt of Rs 25,000 crore to fund the planned acquisition of Hindustan Petroleum Corp (HPCL).
The board of ONGC has approved raising the debt and would now take the proposal to shareholders. “This is a blanket approval. We have kept all options open from bank loan to issue of domestic or overseas bonds,” a senior executive at ONGC said. ONGC would need Rs 37,750 crore to pay for government’s 51.1% stake in HPCL at current market prices.
ONGC plans to use a mix of internal resources and debt to fund the deal. It has a cash reserve of about Rs 13,000 crore. This would be ONGC’s maiden borrowing in more than a decade. The company has mostly depended on its pile of cash to fund its capex. It has, however, stood guarantor when its units borrowed.
