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Our Bureau

New Delhi, Dec. 9 A decline in the projected return-on-investments does not seem to have come in the way of ONGC’s plan to acquire LSE-listed Imperial Energy Corporation Plc for £1.4 billion (about $2.07 billion).

Securing fresh Government approval on Tuesday, ONGC Videsh Ltd (OVL), the overseas investment arm of ONGC, made its scheduled open offer to the shareholders of Imperial.

OVL had to secure fresh approval of the Cabinet Committee on Economic Affairs as internal rate of return from the planned acquisition has climbed down from the projected 10 per cent at the time of the bid to 3-4 per cent at current crude price.

The committee met on Tuesday morning to consider OVL’s proposal, as the company had to make an open offer by midnight of December 9.

In August, the overseas investment arm had bid for the LSE-listed company at a price of 1,250 pence a share.

The investment arm had already got the Government nod in August projecting a 10 per cent return on investment taking the price of crude oil at $121 a barrel. But since the crude prices have seen a sharp decline and is hovering round $45 a barrel, and the rupee had also depreciated, the rate of return has fallen to 3-4 per cent.

OVL had approached the UK Takeover Panel seeking an extension for making the open offer. However, the panel turned down the request and OVL was required to post its offer document within the stipulated time.

Sources said OVL could not have backtracked at this juncture as it had a binding agreement with Imperial. Any violation could have resulted in legal consequences and put the company’s reputation at stake, sources added.

In a statement posted on LSE Web site the Indian company said the offer document containing the full terms and conditions of the offer is being posted to Imperial Energy’s shareholders and being made available to Imperial Energy’s convertible bondholders.

In another statement, Imperial recommended to the company’s shareholders to accept the takeover offer from OVL. Imperial said the bidder is not obliged to extend an offer to buy the company if Imperial’s shareholders have not accepted the offer by December 30.

“The directors of Imperial Energy are therefore strongly recommending that Imperial Energy shareholders accept the share offer as soon as possible,” the statement said.

OVL is acquiring Imperial through its Cyprus-registered wholly-owned subsidiary Jarpeno Ltd. The company hopes to acquire 90 per cent stake in Imperial through the open offer.

The offer for shareholders will remain open for 21 days and for bondholders for 28 days.

More Stories on : Open Offers | Petroleum | Oil & Natural Gas Corporation Ltd

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