Kolkata: In a rare show of unity, representatives of the West Bengal government and The Chatterjee Group (TCG)—the warring co-promoters of Haldia Petrochemicals Ltd (HPL)—jointly met the firm’s lenders in Mumbai on Thursday to reassure them about their commitment to infuse cash into the company by selling new shares.

The delegation included TCG chief Purnendu Chatterjee, Alapan Bandyopadhyay, principal secretary of West Bengal’s commerce and industries department, and HPL’s managing director Sumantra Choudhury. Bandyopadhyay sits on HPL’s board as a nominee of the West Bengal Industrial Development Corp. Ltd (WBIDC); Chatterjee is HPL’s vice-chairman.

In the wake of the state government’s decision to sell its 40% stake in HPL, which is held through WBIDC, analysts see Thursday’s move to present a united front as indication of a potential reconciliation between the sparring co-promoters of the company. For over a decade, they have been squabbling over ownership and control of HPL. Since 2005, they have been fighting court cases over this dispute.

“(HPL’s) lenders and the two major promoters need(ed) to meet and (do so) on a fasttrack basis," Chatterjee said in an emailed statement, “(and) must solve the problem to save HPL". Chatterjee’s TCG owns 41% in HPL.

The lenders wanted to meet the company’s co-promoters, Choudhury said, adding that they wished to understand if the state government and TPG were working towards infusing cash into HPL.

Partha Chatterjee, West Bengal’s commerce and industries minister and HPL’s chairman, said he, too, would have attended the meeting but couldn’t travel to Mumbai in view of the current political uncertainty that arose out of his party’s (Trinamool Congress) decision to withdraw support for the United Progressive Alliance government at the Centre.

It isn’t immediately known whether the co-promoters managed to convince HPL’s lenders to restart loaning money to the company.

Partha Chatterjee also said that the state government has asked TCG to invest in HPL, but did not indicate how much money he expects Purnendu Chatterjee to come up with. For Purnendu Chatterjee, this presents the first opportunity in at least seven years to raise his stake in HPL.

For years, the state government has disputed TCG’s claim to 155 million shares currently owned by WBIDC. Under agreements from early 2000s, WBIDC had committed to sell the said shares to TCG, but eventually didn’t claiming that Purnendu Chatterjee had not fulfilled his commitment to bring in additional investment.

Sceptics within the government, however, said that the state government and TCG had come together only to bail HPL out of its current financial crisis. Banks have stopped lending to HPL, and despite favourable market conditions the company is unable to ramp up production to full capacity for want of working capital, said state government officials who did not want to be named.

TCG, these officials added, may not co-operate with the state government when it tries to sell its stake in HPL through an auction; Purnendu Chatterjee has opposed the auction from the beginning saying that there is no provision in the original joint venture agreement between the co-promoters for price discovery through competitive bidding.

Though the state government has made up its mind that it will determine the price of its stake through an auction, it stands by its commitment to offer its shares in HPL to TCG first, honouring its first right of refusal; only, the shares will be offered to Purnendu Chatterjee at the highest price discovered through competitive bidding.

In a presentation made to the media in early August, Choudhury had said that it was impossible for HPL to repay its 3,857 crore debt from its cash flow from operations and that there was no alternative to selling new shares. For several months, HPL has been taking new loans to repay existing ones. Concerned about HPL’s financial health, lenders have been lately pressuring HPL to convert some of its loans into equity. “We aren’t yet convinced that the two promoters have buried all their differences—it appears to us that they have come together to help HPL tide over its immediate financial crisis and stay afloat," said one of the state government officials.

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