GE Shipping demerger plan set to face twists & turns
The saga of the demerger of India’s largest private sector shipping company, Great Eastern Shipping, seems set to experience some more twists and turns.
By Bodhisatva Ganguli & Soma Banerjee, TNN |
NEW DELHI: The saga of the demerger of India’s largest private sector shipping company, Great Eastern Shipping, seems set to experience some more twists and turns. While the company informed the Bombay Stock Exchange (BSE) that it was negotiating with one of its stakeholders (ONGC as reported by ET in March), indications are that ONGC may be considering softening its earlier stance.
In a notice to the BSE on Friday, GE Shipping said that one of the ‘contracting counter-parties’ with which its offshore division (which is to be demerged into a separate company called Great Offshore) had signed a contract, was insisting that GE Shipping should continue to be responsible for the performance and execution of the contract.
ONGC had insisted on the parent company’s continuing liabilities towards past contracts. However, when contacted, senior ONGC officials said that while the PSU giant’s legal cell had held such a view, it may be reversed by the top management. These officials said that “it was unlikely to be a major issue.” These officials added that no final decision had been taken.
The notice to the stock exchange says that the ‘contracting counter-party’s’ insistence on the parent company’s liabilities was not acceptable to it (GE Shipping). It said that further negotiations were on. The GE board met on Friday to take stock of the demerger process. The communication sent by ONGC is believed to insist on a tri-partite agreement between GE Shipping, Great Offshore and ONGC. Unless this is reversed by the ONGC top brass, the merger is likely to face roadblocks.
“We have received approvals from all customers, while one customer’s approval is yet to be received. And we are in talks with the authorities concerned,” a GE spokesperson said.
GE is promoted by the Sheth family. The two Sheth cousins, Bharat, the company’s deputy chairman and MD, and Vijay, managing director, had decided to part ways in September ’05. While Bharat Sheth runs GE Shipping, Vijay Sheth would be in charge of the demerged company, Great Offshore, which provides shipping services mainly to petroleum companies.
The GE board had approved a spilt ratio of 80:20 for the demerger. Each GE Shipping shareholder would be issued one fully paid share of Rs 10 each for five shares. The equity capital of GE Shipping would be reorganised into four shares for every shares held.
The Bombay High Court had approved the demerged scheme on January 27. Since then the company has been seeking approval from various stakeholders. ONGC, one of its largest customers, is the only significant stakeholder which is yet to give its approval.
In a notice to the BSE on Friday, GE Shipping said that one of the ‘contracting counter-parties’ with which its offshore division (which is to be demerged into a separate company called Great Offshore) had signed a contract, was insisting that GE Shipping should continue to be responsible for the performance and execution of the contract.
ONGC had insisted on the parent company’s continuing liabilities towards past contracts. However, when contacted, senior ONGC officials said that while the PSU giant’s legal cell had held such a view, it may be reversed by the top management. These officials said that “it was unlikely to be a major issue.” These officials added that no final decision had been taken.
The notice to the stock exchange says that the ‘contracting counter-party’s’ insistence on the parent company’s liabilities was not acceptable to it (GE Shipping). It said that further negotiations were on. The GE board met on Friday to take stock of the demerger process. The communication sent by ONGC is believed to insist on a tri-partite agreement between GE Shipping, Great Offshore and ONGC. Unless this is reversed by the ONGC top brass, the merger is likely to face roadblocks.
“We have received approvals from all customers, while one customer’s approval is yet to be received. And we are in talks with the authorities concerned,” a GE spokesperson said.
GE is promoted by the Sheth family. The two Sheth cousins, Bharat, the company’s deputy chairman and MD, and Vijay, managing director, had decided to part ways in September ’05. While Bharat Sheth runs GE Shipping, Vijay Sheth would be in charge of the demerged company, Great Offshore, which provides shipping services mainly to petroleum companies.
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The GE board had approved a spilt ratio of 80:20 for the demerger. Each GE Shipping shareholder would be issued one fully paid share of Rs 10 each for five shares. The equity capital of GE Shipping would be reorganised into four shares for every shares held.
The Bombay High Court had approved the demerged scheme on January 27. Since then the company has been seeking approval from various stakeholders. ONGC, one of its largest customers, is the only significant stakeholder which is yet to give its approval.
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