The Hindu : BPCL public float in Feb.

Online edition of India's National Newspaper
Thursday, Jul 17, 2003

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Business

BPCL public float in Feb.

NEW DELHI JULY 16. An Inter-Ministerial Group on disinvestment of oil refiner Bharat Petroleum Corp Ltd today favoured bringing the public issue for sale of Government's 35 per cent stake in February next.

The IMG favoured selling 10 per cent of Government equity in BPCL in the domestic market and 25 per cent through the ADR/GDR route, sources said.

"The domestic and overseas floats will happen almost simultaneously and separate set of legal advisors for both offerings would now be appointed for due diligence,'' the sources said.

Besides, auditors would be appointed within a month to advise BPCL on financial compliance with stringent U.S. Securities Exchange Commission (SEC) guidelines for the float.

"The whole process of getting clearances from the Securities and Exchange Board of India (for the dometic offering) and SEC and BPCL complying with US GAAP accounting standards will take six-months time,'' they said.

The sources, however, said the advisors for the disinvestment process had suggested a flexible time-table for the public offering that could be adjusted to the schedule for legal and financial clearances and compliances as also the most favourable market condition.

"A flexible time-table would ensure a better price for BPCL shares,'' the sources said adding the public float will take place after the Government sells its 34 per cent stake in India's second largest refinery Hindustan Petroleum Corporation Ltd (HPCL) to a strategic investor later this year.

It is felt that high strategic price offered for HPCL would drive up valuation of BPCL stock in the months prior to its public offering.

DSP Merrill Lynch and consortium of UBS Warburg and ICICI Securities, Government's advisor for BPCL disinvestment, will assist the Government with preparing for filings before the SEBI and the SEC and also help identify legal advisors as well as audit firm to recast the BCPL accounts to make it US GAAP (Generally Accepted Accounting Practices) compliant.

The Government would offload 25.20 per cent of its equity in BPCL through an issue of American Depository Receipts (ADRs) and another 10 per cent in the domestic market to retail and institutional investors bringing down its holding from 66.2 per cent to 26 per cent after offering 5 per cent of the shares to employees at one third the issue price.

PTI

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