with its employee package, etc," ONGC chairman Shashi Shanker said on January 21.
Earlier, on Saturday the government accepted its Rs 36,915-crore cash offer to buy the Centre's 51.11% holding in HPCL, country's third-largest state-run refiner.
On rejigging the boards of ONGC and HPCL, essentially to make room for representatives of each company in the other's management, Shanker said, "These are minor issues that can be sorted out after the acquisition is completed."
Shanker rejected the view that the acquisition will sap ONGC of the financial strength to go for overseas acquisitions, done through 100 percent subsidiary ONGC Videsh. "With the strength of a consolidated balance sheet (of ONGC and HPCL), ONGC will have a greater appetite for risk and look for better assets (overseas fields)."
Shanker said ONGC has a plan to fund the acquisition but declined to share the details. "We have Rs 12,000-13,000 crore cash. Then there are liquid assets (minor holdings in IndianOil and gas utility GAIL) that we can sell. ONGC board has already raised the borrowing limit from Rs 25,000 crore to Rs 35,000 crore. We also have offers from lenders, both domestic and foreign, for Rs 50,000 crore at very attractive rate," he said. "We may use our cash first and then the liquid assets. Debt will be last...We have worked on the borrowing offers in a way that ONGC will not have to pay penalty at any point," Shanker said.
In a related development, may acquire Mangalore Refinery and Petrochemicals Ltd in a cash and share- swap deal to become India's third-largest oil refiner.
ONGC last week announced acquisition of HPCL for Rs 36,915 crore. After this takeover, ONGC has two refining subsidiaries - HPCL and MRPL. For one, HPCL (Hindustan Petroleum Corp Ltd) sells more petroleum product than it produces and bringing MRPL's 15 million tonne a year refinery under the fold would help bridge the shortfall. Also, there can be synergies in crude oil procurement as well as in optimising refinery set-up, he said. ONGC plans to maintain HPCL as an independent listed company under whom all its downstream units can be consolidated.
ONGC’s board approved the deal on 22 August following the cabinet’s decision to sell the HPCL stake to the explorer.
The acquisition is part of a plan first outlined by finance minister Arun Jaitley while presenting the federal budget in February last year. Bringing HPCL into its fold would make ONGC the nation’s third biggest refiner after Indian Oil Corp. and Reliance Industries Ltd.