5 bankers to vet Hutch Essar books

Essar Group’s bankers, including Citibank and Morgan Stanley, are likely to start examining tomorrow the books of Hutchison Essar Ltd in the run-up to Indian conglomerate’s bid for Hutchison Telecom’s 67 per cent stake in the joint venture company.

The five bankers, Citibank, Morgan Stanley, Standard Chartered, Merill Lynch and Lehman Brothers, would initiate “confirmatory diligence” for Hutch Essar Ltd in a day or two, sources familiar with the development said.

These bankers have already extended funding pledges to the tune of $25 billion to Essar and would now study the books of HEL to get a final picture of its accounts, the sources said.

When contacted, a spokesperson of Essar, which already has three directors on HEL’s Board, declined to comment.

Essar chairman Mr Shashi Ruia had yesterday announced the group’s interest in buying out Hutchison Telecom’s stake from the joint venture. Mr Ruia had said that his group, which has 33 per cent stake in the JV, did not need the due diligence of HEL, as it was their “own company”.

Orascom

Orascom has also said that it has not pulled out of race for Hutch Essar and is very much interested in it. But it is yet to make a firm bid for Hutch Essar.

The Egyptian government has written to the Indian government, seeking clarification on the government’s stand on the same. The company also confirmed a strong presence on HTIL Board.

Meanwhile Vodafone will have to partner with an Indian company, even if a dormant front company, if it succeeds in getting majority control of Hutch Essar, government officials said.

Senior department of telecom officials said under the stipulated regulations, any foreign company such as Vodafone cannot be allowed to keep 74 per cent stake and offer the balance 26 per cent to the Indian public. This is because nobody can keep track of when the Indian public sells that share to foreign investors in secondary market transactions.

Mandelson meets Nath

The commerce and industry minister, Mr Kamal Nath, today confirmed the EU trade commissioner, Mr Peter Mandelson, spoke to him on the possibility of a bid by British mobile phone giant Vodafone to acquire Hutchison stakes in Hutch Essar.

“Mr Mandelson wanted to understand the regulations in India,” Mr Nath said on the sidelines of the Ficci AGM.