ONGC borrows Rs 4K cr from ICICI Bank for buying HPCL

State-owned Oil and Natural Gas Corp (ONGC) has borrowed Rs 4,000 crore from ICICI Bank on top of over Rs 18,000 crore it has taken from three other banks to part finance its Rs 36,915 crore acquisition of HPCL.

Sources said ICICI Bank has extended one-year loan to ONGC to fund the acquisition of government's 51.11 per cent stake in Hindustan Petroleum Corp Ltd (HPCL).

ONGC had yesterday stated that it has entered into loan agreements with Punjab National Bank, Bank of India and Axis Bank Ltd for the borrowing Rs 18,060 crore for the acquisition.

The pact with PNB is for loan of up to Rs 10,600 crore and with Bank of India for another Rs 4,460 crore.

With Axis Bank it has secured Rs 3,000 crore credit.

The company is likely to sign-up more loan agreements to pay Rs 36,915 crore to the government before the month-end.

The acquisition would create India's first integrated oil company. This would be ONGC's biggest acquisition and second buyout this fiscal after its Rs 7,738 crore acquisition of 80 per cent stake in Gujarat State Petroleum Corp's KG basin gas block.

ONGC Chairman and Managing Director Shashi Shanker had on Sunday stated that the company's board has approved raising of the borrowing limit from Rs 25,000 crore to Rs 35,000 crore. This will be the company's first ever debt.

"We will use our (Rs 12,000-13,000 crore) cash first and then the liquid assets and debt will be last," he had said. "This order can change, because we won't sell the liquid assets in distress. Also, we have offers for over Rs 50,000 crore debt at very competitive rates, both foreign currency and local."

ONGC holds 13.77 per cent stake in Indian Oil Corp (IOC), which is worth over Rs 26,000 crore. It also holds 4.86 per cent stake in GAIL India Ltd, which is worth over Rs 3,800 crore.

The company had on January 20 announced buying of government's 51.11 per cent stake in India's third largest state-owned oil refiner and marketing company for Rs 473.97 per share in an all-cash deal that is to be closed before the month-end.