Financial Daily from THE HINDU group of publications
Tuesday, Apr 18, 2006
Financial Daily from THE HINDU group of publications Tuesday, Apr 18, 2006 |
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Corporate - Mergers & Acquisitions ONGC unlikely to take stake in SPIC Petro Our Bureau
Not worthy `We have carried out the due diligence exercise and did not find value in the acquisition.' Ernst & Young was the lead advisor for the proposed acquisition.
Kolkata , April 17 ONGC Ltd is unlikely to acquire a stake in SPIC Petrochemicals. The oil and gas major had taken interest in the project following advice from the Union Petroleum And Natural Gas Ministry last fiscal, and had also completed due diligence and valuation exercises. "The acquisition now seems unlikely," a senior ONGC official told Business Line. "We have carried out the due diligence exercise and did not find value in it (SPIC Petrochemicals acquisition)." ONGC had appointed Ernst & Young as the lead advisor for the proposed acquisition. Engineers India Ltd (EIL) and Amarchand & Mangaldas, a law firm, were appointed as technical and legal consultants respectively for conducting due diligence. The reports were made available in February-March, 2006. Promoted by the SPIC group, SPIC Petrochemicals had planned to set up a purified terephthalic acid (PTA) and polyester filament yarn (PFY) facility at Manali in Chennai. However, the project was stalled in the late 90s when SPIC entered into a legal wrangle with Chennai Petrochemicals Corporation Ltd (CPCL). When the Madras High Court passed an injunction in October 1997, funds worth Rs 946 crore were locked up in the project. Of this, SPIC's contribution was Rs 252 crore. The remaining Rs 694 crore was brought in by lenders. At that stage, the PFY plant was more than 75 per cent completed, or about 12 months from going on stream. The PTA plant had progressed to the extent of 11 per cent and was nearly two years away from completion.
Related Stories: More Stories on : Petroleum | Mergers & Acquisitions | Oil & Natural Gas Corporation Ltd
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