India’s most valuble company, Reliance Industries Ltd (RIL), is expected to take a call within a day on whether to submit a final proposal to acquire bankrupt petrochemicals maker LyondellBasell Industries AF, according to people familiar with the situation.
Mukesh Ambani-controlled RIL had submitted a non-binding proposal of $10-12 billion (Rs46,700-Rs56,040 crore) on 21 November for Rotterdam, Netherlands-based LyondellBasell.
A decision on the final bid is contingent on the inputs received from a team of senior RIL executives who had been working on the deal in the US.
The people familiar with the situation, who spoke on condition of anonymity, said the executives have since returned and new facts they have gleaned about the target firm may influence the final decision on the bid.
For example, while LyondellBasell’s debt is at $27 billion, RIL is believed to have learnt that many of its creditors have a right to increase interest rates, which they have to almost 12%.
The people say that while talks have been under way with creditors, debt of this magnitude and cost has to be renegotiated before the company can submit a binding final proposal.
Shutting down LyondellBasell’s old facilities in the US and Europe could be messy and there are concerns related to integration and management issues given that RIL does not have a track record of major overseas ventures of this scale.
The management as well as promoters of LyondellBasell have made it clear over the last few days that they are not interested in losing control of the company.
LyondellBasell submitted a revised proposal last week to a US bankruptcy court aimed at taking the company out of bankruptcy proceedings.
The people familiar with the situation also said that RIL was not keen on a hostile takeover of the firm.