The Hindu Business Line : Imperial acquisition on track; aim to complete ahead of schedule: ONGC

New Delhi, Nov. 25 Oil and Natural Gas Corp is hopeful of completing the acquisition of LSE-listed Imperial Energy Corp ahead of the deadline of June 2009. Mr R.S. Sharma, ONGC, Chairman and Managing Director said, “The entire transaction has to be closed by June 2009. We are well on track.”

ONGC Videsh Ltd (OVL), the overseas investment arm of ONGC, through which the exploration major is routing its bid for Imperial, has fulfilled all pre-conditions for acquisition. Mr Sharma said at the sidelines of the India-CIS roundtable on hydrocarbons here on Tuesday that there were no concerns whatsoever about concluding the deal. Imperial has oil and gas assets in Russia.

Earlier, the visiting Russian Energy Minister, Mr Sergey Shmatko, said Russia will not set any pre-condition like a stake for its State-run companies in exchange for giving approval to the acquisition.

He told newspersons at the sidelines that “Actually our approach towards this deal is quite liberal and if the Indian company would like to acquire Imperial Energy, we are not going to put forward any demands.”

OVL has bid for Imperial for $2.59 billion and has to make an offer to acquire the remaining shares of the company by December 9. All of the funding for the acquisition is in place. While ONGC is lending a substantial portion of funds for the acquisition to OVL at 6 per cent interest rate, the remaining has been tied up in bridge loan.

The Indian company has got the Russian Government approval for taking over Imperial. Russia’s Federal Anti-Monopoly Service (FAS) granted approval in respect of the ownership of Russian entities controlled by a foreign government. FAS has cleared the acquisition under anti-monopoly regulations and stated that Imperial’s assets were not strategic.

No revision

Meanwhile NewsWire18 adds that OVL will not revise its offer price for acquiring Imperial Energy despite the fall in global crude oil prices, a source close to the development said. In August, OVL had made a cash offer to buy Imperial for 1,250 pence a share, valuing the acquisition at £1.4 billion (approximately $2.18 billion). However, crude oil prices have plummeted since then, and so has the share price of Imperial, fuelling speculation that OVL may revise the offer price. Crude oil prices have come down from $120 a barrel in August to below $50currently. “OVL has the option, but is not considering revising the price. It is already going ahead with the process of making the formal open offer,” the source said. He said despite the recent fall in crude prices, the valuation of Imperial remains attractive at around $3 a barrel for its oil reserves.

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