New Delhi, Sep 5 : The government has further eased the norms for prospective bidders interested in buying out the government’s entire 52.98 per cent stake in Bharat Petroleum Corporation Ltd (BPCL) by allowing the winning candidate to restructure its corporate entity anytime before signing the share purchase agreement.
What this would mean is that the winning candidate or company in BPCL privatisation can rope in more investors and change the structure of special purpose vehicle (SPV) that placed expression of interest (EoI) for the Indian refiner anytime before completing the share purchase.
This is expected to give more confidence to investors who feel that a consortium approach is best suited to takeover BPCL or others who get a key investor to participate in management of the privatised entity.
In wake of COVID disruptions, bidding for BPCL has been postponed four times with EoI submission now extended till September 30. The government has now made the process even more flexible to get maximum interest.
Latest amendments to Dipam’s (Department of Investment and Public Asset Management) preliminary information memorandum for prospective investors in BPCL suggests the interested parties qualifying in EoI and later deciding to participate as consortium can do so within 45 days of such qualification but with original interested party being the lead member in the consortium with around 40 per cent stake.
But such consortium will not be permitted between two individual companies qualifying in the EoI round. Similarly, a consortium between two separate qualified consortiums will also not be permitted.
The changes in PIM has not only provided flexibility to interested parties to incorporate investment vehicle taking over shares in BPCL till the time of signing SPA but has also provided flexibility to the interested party, which is a sole bidder, to form a 100 per cent subsidiary as a SPV for the acquisition of government’s stake in BPCL.
“The SPV can be formed at any time after submission of EOI but prior to signing of the SPA. Both the IP and the SPV will have to sign the SPA in case IP is selected as the strategic investor. The eligibility criteria will need to be satisfied by the IP, and each of the IP and the SPV will have to ensure that it is not disqualified as per the criteria listed for disqualification,” the revised PIM for BPCL disinvestment said.
Also, if an IP (interested party) satisfies the Net Worth criteria on the basis of the net worth of its parent, then the IP and the parent both will have to sign the SPA.
Additionally, if an IP being a subsidiary forms a SPV to takeover BPCL, then the IP, its parent and the SPV all three will have to sign the SPA. The Net Worth eligibility criteria shall be met by the entity into which the accounts of the IP are consolidated (“Parent”) while all the other eligibility criteria should be satisfied by the IP. Each of these entities i .e. the Parent, IP and the SPV will have to ensure that it is not disqualified as per the criteria listed for disqualification.