Indian Oil to acquire insolvent Mercator Petroleum

8 Mar 2023 , 03:18 AM

In a rare takeover by a government undertaking under the Insolvency and Bankruptcy Code, Indian Oil Corporation (IOC) is set to acquire Mercator Petroleum.

Lenders of the Mumbai-based onshore petroleum extraction company unanimously approved IOC’s resolution plan, resulting in a 46% recovery for financial creditors, stated the sources.

According to the report, IOC has also offered to share revenue from oil and gas exploration with lenders for the next 15 years.

Mercator Petroleum is a subsidiary of Mercator, a stock exchange-listed shipping container firm that is also going through the IBC debt resolution process.

According to the sources, Indian Oil has offered an upfront payment of Rs135 crore to Mercator Petroleum’s financial creditors in exchange for admitted claims of Rs292 crore.

According to one person involved in the resolution process, the recovery for lenders will exceed 46% due to the profit-sharing agreement.

IOC has also proposed a Rs5 crore payment to employees, trade creditors, and government debts. The total amount claimed under these headings is approximately Rs191 crore.

Mercator Petroleum owns one exploration block in Gujarat’s Cambay basin.

UTI Capital and Bank of Baroda are financial creditors of Mercator Petroleum, holding 41.2% and 58.8%, respectively. According to the approved plan, the Bank of Baroda would receive 60% of the upfront payment due to its superior security.

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