Oil and gas explorer ONGC has entered into short-term loan agreements with three banks to part-fund its acquisition of HPCL.
Accordingly, the company has entered into agreements with PNB, Axis Bank and Bank of India on January 22 for loans totalling to Rs 18,060 crore. As per a BSE filing made on late Tuesday evening, the agreements are for short-term loans to part-finance the acquisition of HPCL. The filing detailed that PNB will lend Rs 10,600 crore, while the loan amount from BOI will be Rs 4,460 crore and that from Axis Bank will be Rs 3,000 crore. On January 21, the oil and gas explorer had said that various “options” including internal accruals and short-term borrowing are available to fund its acquisition of HPCL.
“We have various options available with us to fund this deal,” Shashi Shanker, Chairman and Managing Director of ONGC, told a press briefing here on last Sunday. “There is an option of internal accruals… another option is of short-term borrowing and liquid assets… We will exercise the most beneficial option available with us.” According to Shanker, acquisition of the Central government’s 51 per cent stake in HPCL worth over Rs 36,900 crore can also be done through the combination of various options available with ONGC. “We have internal resources available with us which is around Rs 13,000 crore. We also have large shareholding in IOC (Indian Oil Corporation) and GAIL and we can also borrow,” Shanker had said. He had disclosed that the company’s board has approved to hike the borrowing limit to Rs 35,000 crore and that ONGC has also received loan offers worth Rs 50,000 crore at attractive rates.