Indian Oil acquires insolvent Mercaptor Petroleum

17 May 2024 , 03:03 PM

The largest oil marketing firm in India, Indian Oil Corp Ltd (IOCL), has successfully completed a ₹148 Crore acquisition of Mercator Petroleum, an oil and gas company. This is IOCL’s first acquisition made possible by the insolvency and bankruptcy code (IBC). According to news reports, the agreement was finalised on Tuesday when the business sent the funds to Bank of Baroda (BoB), the principal lender.

About 31% of the ₹482 Crore in total admitted dues have been recovered with the ₹148 Crore agreement. While operational creditors, such as personnel and vendors, are to receive ₹5.40 Crore against their total accepted claims of ₹73 Crore, secured creditors are to receive ₹135 Crore for their admitted claims of ₹291 Crore.

The purchase of Mercator by IOCL was allowed by the Mumbai bench of the NCLT in November of last year. However, due to government-related procedural delays, the agreement was not finalised within the allotted 60 days.

Mercator’s financial creditors, UTI Capital and Bank of Baroda (BoB), control approximately 40% and 60% of the debt, respectively. The proceeds will be allocated based on the debt holdings.

In the Gulf of Khambhat in Gujarat, Mercator possesses land-based oil and gas search blocks that it acquired in 2008. The estimated oil reserves in the block are 4.55 Crore barrels. Because the block is roughly 60 km from the massive petroleum refinery block at Koyali, it is a favourable acquisition for IOCL.

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