Mumbai, Nov 11: The government of Orissa is seeking strategic equity participation in the Orissa Power Generation Corporation (OPGC).

DSP Merill Lynch, on behalf of OPGC and the state government, has invited offers for acquisition of 26 per cent of the company's equity with `first refusal' right on any subsequent disinvestment.

The disinvestment would be through a combination of fresh issue of equity by OPGC (eight per cent of enhanced equity capital) and sale of shares by the government of Orissa (18 per cent of enhanced equity capital).

The successful bidder would be entitled to nominate proportionate members on the board of OPGC including the director (operations) who would be responsible for day-to-day plant operations.

Directors nominated by the successful bidder will also participate in the key management sub-committees of the board that may be appointed from time to time.

All significant decisions regarding change in board structure, execution of material contracts, key financial transactions, changes in business of the company etc would be taken with the consent of the strategic investor.

The present equity capital of OPGC of Rs 459 crore is wholly owned by the government of Orissa. OPGC has a 420 MW (two units of 210 MW each) coal-fired thermal power plant at lb valley in Orissa. The two units were commissioned in 1994 and 1996 respectively at a project cost of Rs 1135 crore. OPGC has a 30-year power purchase agreement with Grid Corporation of Orissa for the entire power generated. The company has achieved a high plant load factor and has made profits during the last three years of its operations.

The company is planing to expand its capacity by 2x210 mw. Significant development work has been completed and approvals obtained for expansion. Offers for acquisition are invited from domestic or foreign companies and/or investment funds having either singly or in consortium:

Funds under management in excess of Rs 300 crores (US$ 85 million).

After review of information, interested bidders may submit their initial bids comprising non-binding price bids and documents in confirmation of meeting the prequalification criteria set out above. The empowered committee of the Orissa government will shortlist prequalified bidders, who will be provided an opportunity for detailed due diligence and review of the draft shareholders' agreement.

The shortlisted bidders would then be asked to submit their final and binding bids.

The empowered committee would announce the successful bidder after considering the final bids.

The request for bid documents should reach DSP Merill Lynch before close of business on November 27, 1997.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.