Indian Oil to invest Rs1,000 crore to raise stake in Chennai Petroleum

New Delhi: State-owned Indian Oil Corporation Ltd (IOCL) will invest Rs.1,000 crore for raising stake in Chennai Petroleum Corporation Ltd (CPCL) by subscribing to preferential issue. CPCL shareholders have decided to increase authorised share capital of the company from Rs.400 crore (40 crore shares of Rs.10 each) to Rs.1,400 crore, the company said in a regulatory filing.
Through a postal ballot, shareholders agreed “for issue of 100 crore non-convertible cumulative redeemable preference shares of Rs.10 each for cash at par amounting to Rs.1000 crore on private placement preferential allotment basis, in one or more tranche to IOCL,” it said. The increased share capital would be by way of creation of 100 crore preference shares of Rs.10 each.
The enhanced share capital of the company would thus comprise of 40 crore equity shares of Rs.10 each and 100 crore preference shares of Rs.10 each. IOCL currently holds 51.89% in CPCL, while the other promoter, Iran’s Naftiran Inter Trade Company Ltd, owns 15.40%. The preference allotment is being done only to IOCL and not to the Iranian firm.
CPCL, however, did not say how much will IOCL’s shareholding in the company increase upon it subscribing to the preference issue. They also approved raising borrowing limit to Rs.8,000 crore for both domestic and foreign borrowings and to borrow Rs.3,000 crore through a debenture issue on private placement basis to fund expansion plans.
Source: Mint; 20 July 2015
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