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TCG-backed Haldia Petrochemicals gets third time lucky with Nagarjuna Oil Corp

Two years after the lenders of Nagarjuna Oil Corporation rejected Haldia Petrochemicals’ resolution plan, a bankruptcy court has cleared the proposal under the liquidation process.  

Haldia Petrochemicals Ltd, majority owned by The Chatterjee Group (TCG), is set to buy Nagarjuna Oil Corporation Ltd (NOCL) after the Chennai bench of the National Company Law Tribunal approved a resolution plan for the refinery project under the liquidation process of the Insolvency and Bankruptcy Code.  

V Mahesh, liquidator of the firm, confirmed that the development had been pronounced in the open court but the NCLT order is yet to be published.  

This is likely Purnendu Chatterjee- led TCG’s second acquisition via the bankruptcy courts, after one of its wholly owned subsidiaries acquired debt-ridden Garden Silk Mills Ltd in January.  

Hyderabad-based NOCL, an associate firm of publicly-listed Nagarjuna Oil Refinery Ltd, owed a total of nearly Rs 11,000 crore to almost 17 financial creditors.  

NOCL is a joint venture of Nagarjuna Fertilizers & Chemicals and Tamil Nadu Industrial Development Corporation.  

When it was set up, the project was supposed to be one of the biggest for the Tamil Nadu government. Despite several tax incentives offered during a global investor meet held in 2015, the project got stalled due to a shortage of funds, previous reports said.  

NOCL's refinery project in Cuddalore was supposed to go on stream in 2012, but faced numerous delays, including a cyclone in 2011. A Hindu report said that time and cost overruns escalated the costs to around Rs 15,000 crore from the initial estimate of 3,500 crore.  

Not an easy journey  

Haldia Chemicals’ proposal to revive Nagarjuna Oil was  in the works for three years.    

When NOCL was initially admitted into insolvency in July 2017, it received bids from Bharat Petroleum Corporation Ltd (BPCL) and Citax Energy DMCC, which were placed before the Committee of Creditors (CoC) in March 2018.   

After both plans failed to make the cut, a fresh invitation was issued. This time prospective bidders included West Bengal-based Haldia Petrochemicals and GP Global, UAE, formerly known as Gulf Petrochem along with the previous bidders from the last round.  

Of the four, Haldia Petrochemicals’ plan was submitted to the COC by the resolution professional but  98% of the lenders voted against it as the amount offered was far below the liquidation value. 

Later in 2018, the CoC once again reviewed two resolution plans submitted  afresh by the Gulf Petrochem and Haldia Petrochemicals. 

Gulf Petroleum’s proposal stood at Rs 655.61 crore while Haldia Petrochemicals’ resolution plan offer was at Rs 1,456 crore -- just above the liquidation value.  

However, Haldia’s plan also contained several “conditions precedent” which would fetch financial creditors a value of Rs 1,042 crore through preference and redeemable shares only two years after NCLT approval, the tribunal had said in a previous order. 

This did not get lender approval.  

As a result in December 2018, the NCLT bench ordered liquidation of Nagarjuna Oil Corp after none of the resolution plans  materialised.    

While the Gulf Petroleum offer was much lower, Haldia’s plan would have resulted in over 90% haircut for the secured financial creditors with no concrete and significant payment to other stakeholders, NCLT had said in 2018 while ordering liquidation.  

However, Haldia Petrochemicals ultimately won the bid under liquidation. Details of the resolution plan are yet to be disclosed but the liquidation price is unlikely to top previous bids.   

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