Financial Daily from THE HINDU group of publications
Wednesday, Aug 07, 2002
Mergers & Acquisitions
Lenders not to hold more than 25% in MRPL
MUMBAI, Aug 6
THE lenders who have exposure to Mangalore Refineries and Petrochemicals Ltd (MRPL) will not hold more than 25 per cent of the equity capital of the company, post-restructuring.
According to the understanding reached between Oil and Natural Gas Corporation and the financial institutions and banks, the lenders will have the option of converting their exposure into equity or zero-coupon bonds.
ONGC bought out the A.V. Birla group's 37.5 per cent stake in MRPL last week for a consideration of about Rs 60 crore, sources said.
The company's capital base will expand to Rs 1,800 crore from roughly Rs 800 crore now. After the recast, ONGC will become the largest shareholder with about 60 per cent of the capital, while banks and FIs will hold around 22 per cent. HPCL's stake will come down from 37.5 per cent to near 15 per cent, they said.
ONGC may also buy out HPCL's holding in the company and the issue is being discussed by the Central Government.
Since HPCL is one of the disinvestment candidates, it fears that if it sells its stake now, the capital loss will get reflected in its balance sheet.
If the disinvestment of HPCL does not happen immediately, there is a good chance that the value of its holding in MRPL will increase.
According to the restructuring package worked out between ONGC and lenders, the oil producer will pre-pay about Rs 600 crore of MRPL's debt. The amount will be converted into preference capital.
MRPL's total debt had soared to about Rs 5,500 crore, taking the debt-equity ratio to 8:1. After the recast, the debt-equity ratio will come down to 2.5:1. Total debt in absolute terms will be reduced to about Rs 4,500 crore on which the company will also get interest rate reductions.
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