Indian Oil Corp Ltd (IOCL), India’s largest oil marketing company has completed the Rs 148 crore deal to acquire oil and gas company Mercator Petroleum, its first acquisition through the insolvency and bankruptcy code (IBC). The deal was completed on Tuesday after the company transferred the amount to lead lender Bank of Baroda (BoB), people familiar with the matter said.
The Rs 148 crore deal amounts to about 31% recovery for total admitted dues of Rs 482 crore. Secured creditors are to receive Rs 135 crore for their admitted claims of Rs 291 crore, while operational creditors including employees and vendors are to receive Rs 5.40 crore against their total admitted claims of Rs 73 crore. IOCL is also supposed to bear the process cost of Rs 8.7 crore.
“The money was received and distributed among the creditors this week. There are some procedural things to be completed before IOCL will be given complete charge of the company in the next week or so,” said a person familiar with the deal.
Besides the money, creditors are also entitled to any upside from future gains from the oil discoveries. “Banks can also gain from the oil related upside from this company after a certain threshold. But those gains are not in the immediate future,” the person cited above said.
The Mumbai bench of the NCLT had approved IOCL’s acquisition of Mercator in November last year, but the deal was not completed within the 60-day time period because of government related procedural delays. A IOCL spokesperson did not reply to an email seeking comment.
UTI Capital and Bank of Baroda (BoB) are financial creditors of Mercator, holding about 40% and 60% of the debt, respectively, with the proceeds to be distributed according to the debt holding. Lead lender BoB and resolution professional (RP) Krishna Chamadia also did not reply to an email seeking comment.
Mercator has terrestrial oil and gas search blocks in the Gulf of Khambhat, Gujarat which it won in 2008. The block has an estimated 4.55 crore barrels of oil reserves. It is a good acquisition for IOCL because the block is located about 60 kilometers from the Koyali refinery block of the petroleum behemoth.
