ONGC may opt for loan of $1 billion to acquire Imperial

ONGC may opt for loan of $1 billion to acquire Imperial


New Delhi: Oil and Natural Gas Corp (ONGC) may take a bridge loan of $1 billion to partly fund the acquisition of UK-listed Imperial Energy, chairman R S Sharma said today.

ONGC Videsh Ltd, the overseas arm of ONGC, hopes to win an approval from Kremlin to go ahead with the purchase of Imperial for $2.59 billion. ONGC will loan the remaining $1.59 billion to OVL at 6% interest rate.

“We would like to take a loan to bring more credibility to the transaction," he told reporters here. “Loan could be a mix of local and overseas borrowings."

Sharma said ONGC may sell its stake in Indian Oil Corp, the nation’s biggest oil refiner, and gas utility GAIL India to fund the purchase.

“We have all options before us. Funding is not an issue," he said. ONGC has 8.83% stake in IOC and 4.83% in GAIL.

The deal is contingent upon Kremlin’s approval as Imperial has assets in Tomsk region of the western Siberia. A committee headed by Prime Minister Vladmir Putin, which screens foreign investments in strategic sectors, is to decide on OVL’s acquisition of Imperial.

Petroleum Minister Murli Deora had last spoken to Russian President Dmitry Medvedev who had promised to support the deal.

“We have received verbal assurance that Russian government has no objection to our deal but we are still awaiting a written communication," an OVL director said. “We expect to hear something from them next week."